What does excess inventory really cost you?
Excess inventory ties up cash and creates capital, storage, markdown and risk costs. There is no single yearly percentage for every fashion business. Use the calculator with your own cost price, warehouse tariff and assumptions to compare deciding now with waiting another season.
Four costs that never arrive on one invoice
Calculate the four cost categories separately. A storage invoice covers only part of the cost of holding stock.
| Cost | What it is | Example input | Where you see it |
|---|---|---|---|
| Capital | Money sitting in the lot that cannot go into new buying or marketing. Use the rate on your credit line, or the return a new collection would make. | 6% | Nowhere; it is revenue you did not make |
| Storage | Pallet or location fees at your 3PL, or the square metres in your own warehouse, plus handling at counts and moves | €10 / pallet / week | The 3PL invoice |
| Markdown | An assumed reduction in stock value over time. Enter a monthly rate for this scenario; it is not a measured market rate. | 24% / 52 weeks | The annual accounts, in the stock valuation |
| Risk and service | Insurance, breakage, discolouring, packaging damage, and the hours your team spends discussing it | 4% | Spread across the business |
Capital
- What it is
- Money sitting in the lot that cannot go into new buying or marketing. Use the rate on your credit line, or the return a new collection would make.
- Example input
- 6%
- Where you see it
- Nowhere; it is revenue you did not make
Storage
- What it is
- Pallet or location fees at your 3PL, or the square metres in your own warehouse, plus handling at counts and moves
- Example input
- €10 / pallet / week
- Where you see it
- The 3PL invoice
Markdown
- What it is
- An assumed reduction in stock value over time. Enter a monthly rate for this scenario; it is not a measured market rate.
- Example input
- 24% / 52 weeks
- Where you see it
- The annual accounts, in the stock valuation
Risk and service
- What it is
- Insurance, breakage, discolouring, packaging damage, and the hours your team spends discussing it
- Example input
- 4%
- Where you see it
- Spread across the business
The percentages and tariffs below are worked-example inputs, not measured industry benchmarks or a quotation from a warehouse. Markdown is linear against the original cost price and stops when that value has been written down. Capital and risk are annual rates; a year has 52 weeks.
Worked example: a €50,000 lot
Worked example: stock at cost €50,000, 6 pallets, storage €10 per pallet per week, interest 6 percent per year, markdown 2 percent per month and risk 4 percent per year. These are the calculator defaults. Replace them with your own inputs.
| After | Capital | Storage | Markdown | Risk | Total cost | Value left |
|---|---|---|---|---|---|---|
| 13 weeks | €750 | €780 | €3,000 | €500 | €5,030 | €47,000 |
| 26 weeks | €1,500 | €1,560 | €6,000 | €1,000 | €10,060 | €44,000 |
| 52 weeks | €3,000 | €3,120 | €12,000 | €2,000 | €20,120 | €38,000 |
13 weeks
- Capital
- €750
- Storage
- €780
- Markdown
- €3,000
- Risk
- €500
- Total cost
- €5,030
- Value left
- €47,000
26 weeks
- Capital
- €1,500
- Storage
- €1,560
- Markdown
- €6,000
- Risk
- €1,000
- Total cost
- €10,060
- Value left
- €44,000
52 weeks
- Capital
- €3,000
- Storage
- €3,120
- Markdown
- €12,000
- Risk
- €2,000
- Total cost
- €20,120
- Value left
- €38,000
At these assumptions, 52 weeks costs €20,120, including €12,000 of markdown. The remaining stock value is €38,000. This is a scenario calculation, not a forecast of a buyer’s bid.
What the first analysis at Pockies showed
Pockies, the underwear and loungewear brand run by the founders of Unworn, ran the analysis on its own stock first. €173,958 at cost price was standing still across 18 articles, costing €1,109 a week to keep. Most of it sat in underwear (€109,548, on average 108 days since the last sale) and loungewear (€60,802, 62 days). Nobody in the company had ever added that number up, because the webshop, the ERP and the warehouse each held a different part of the picture.
Why the number is usually missing
Your webshop knows what sold. Your ERP knows what it cost. Only the warehouse knows what is actually on the shelf. Three systems, three counts, and usually nobody joining them at EAN level. So the decision gets postponed, and every month it is postponed the answer gets worse. Unworn's free analysis reads the three systems (Shopify, Itsperfect, Monta, or a CSV) and returns one number: what is standing still, where, and what it costs per week.
What you do with the number
The number is only useful once it leads to a decision. Per article there are roughly these routes: hold until next season, mark down in your own channel, bundle, sell as a lot to a screened buyer, donate, recycle. Which one pays depends on age, category, condition, and how much you can still move in your own channel without damaging your price point.
ShopifySee the integration
ItsperfectSee the integration
MontaSee the integration
Frequently asked questions
Excess inventory is stock you hold beyond what you can sell at a normal price within a normal period. It covers slow moving stock that still sells and dead stock that has stopped selling. Dead stock, in the inventory sense, is stock that has not sold for twelve months or more and is not expected to sell at full price.
Add capital, storage, markdown and risk costs for the same period. Use your financing rate and warehouse invoice; state markdown and risk assumptions separately. Divide yearly costs by 52 for the weekly average. The calculator is a scenario, not an industry average.
A practical threshold is 90 days without a sale for seasonal items and 180 days for basics. Unworn's analysis looks at sales velocity against the stock on hand per article, not only at the date of the last sale.
Sometimes, for basics without seasonal features and for small quantities. Count the full yearly cost, and be honest about the chance the article still fits the collection next year.
Nothing. The analysis is free and stays yours whether or not you ever sell anything through the platform.