01 What surplus stock costs your business
The purchase price is only part of the total cost. While surplus stock remains in storage, it ties up capital, uses warehouse space and can lose value.
Financial costs
- Working capital tied up in slow-moving stock
- Storage and handling costs
- Insurance costs
- Extra stock administration
Operational costs and value loss
- Warehouse space used by slow-moving stock
- Slower stock counts and more errors
- Damage, corrosion and worn packaging
- Lower resale value as products become outdated
| Annual cost example · €500.000 in surplus stock | |
|---|---|
| Cost of capital tied up in the stock (8%) | €40.000 |
| Storage (250 m² at €90 per m² per year) | €22.500 |
| Insurance, administration and stocktaking (2%) | €10.000 |
| Write-downs and damage (3%) | €15.000 |
| Total annual carrying cost (17,5% of stock value) | €87.500 |
Illustrative example only. Use the worksheet below to calculate your own costs.
02 Worksheet: what your surplus stock costs
Calculate what your surplus stock costs each year and how much warehouse space it takes up.
| A · Establish the base | |
|---|---|
| Total stock value at cost | From your stock records (€) |
| Estimated share that is slow-moving, excess, obsolete or surplus | Percentage of total stock value (%) |
| Surplus stock value (A) | Total stock value × share (€) |
| B · Annual carrying costs | |
|---|---|
| Cost driver | Calculation |
| Cost of capital | Surplus stock value × cost of capital (%) |
| Storage | m² × € per m² per year |
| Insurance | Surplus stock value × insurance rate (%) |
| Handling and administration | Hours × € per hour |
| Write-downs and damage | Total over the last 12 months |
| Total annual carrying cost (B) | Sum of all cost drivers (€) |
| C · Warehouse space | |
|---|---|
| Measure | Calculation |
| Surplus pallet positions | Physical count or warehouse records |
| Average area per pallet position | Internal warehouse figure (m²) |
| Warehouse space used by surplus stock | Positions × area per position (m²) |
→ A printable version of this worksheet is included in the full PDF guide. Subscribe below to receive it.
You now know what your surplus costs.
With the annual cost and the space it occupies on paper, you have the figures to justify action. In the next part, you can decide which stock to keep and which to sell.