Damaged Goods Write-Off Calculator

Carrier claims are the recovery nobody claims.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Units damaged per month

Cost per unit

Share salvageable

Salvage value as share of cost

Disposal cost per unit

Share recovered from carriers or insurance

Monthly write-off

$1,816

$21,794 a year

Cost of damaged units$2,610

Salvage value recovered$365

Disposal cost−$94

Carrier or insurance recovery$522

Carrier claims are the recovery most often left unclaimed, because the paperwork exceeds the value of a single item. Batching claims monthly rather than per incident is what makes $6,264 a year worth pursuing.

How the Damaged Goods Write-Off Calculator works

Also known as: unsellable returns cost · damaged stock write off · return condition loss calculator

Working out what a write-off actually removes

A write-off is not the retail price. It is the landed cost of the item, which is what you actually paid to have it sitting in your warehouse: the unit price, the freight in, the duty, and any handling capitalised into inventory. Writing off at retail overstates the loss and, more importantly, misstates your accounts.

Add the costs already spent on the specific unit that is now unsellable. Outbound shipping if it went out and came back. Return shipping. The handling that established it was damaged. None of those are recoverable and all of them belong in the incident cost even though they are not in the inventory value.

Then subtract any salvage. A damaged item may still fetch something as parts, as a liquidation unit, or as a warranty claim against the supplier or carrier. The net write-off is what remains, and it is frequently a good deal less than the gross figure that gets quoted internally.

Chasing the claim

Damage in transit is usually somebody else's liability, and a surprising proportion of sellers never claim. Carriers carry limited liability by default, typically low, with additional cover available at a premium. Whether the default is worth claiming against depends on the item's value and the carrier's process, which ranges from straightforward to deliberately exhausting.

The evidence requirement is the same everywhere and worth building into the receiving process rather than reconstructing later: photographs of the outer packaging before opening, photographs of the damage, the tracking reference, and the original packing evidence. Operations that photograph every damaged arrival as routine recover materially more than those that decide case by case.

Supplier damage is a different conversation and usually a more productive one. A defect rate above what was agreed is a commercial matter, and most suppliers will credit rather than lose the account. The requirement is data: a defect log by shipment and by SKU carries far more weight than an assertion that quality has slipped.

Deciding between repair, discount and disposal

Three routes and the arithmetic decides. Repair costs labour and parts and restores some proportion of value. Discount sells it as-is at a reduced price with no further cost. Disposal recovers nothing and may cost money.

Repair is worth it when the restored value less the repair cost exceeds the discounted value. On a £120 item where a £15 repair restores full value against a £70 open-box price, repair wins by £35. On a £30 item where the repair costs £12 and open-box fetches £22, it does not.

Disposal deserves more thought than it gets, because it is increasingly regulated. Electrical goods, batteries and textiles all carry producer responsibility obligations in the UK and EU, and the compliant route costs money while the non-compliant route carries penalties. France has banned the destruction of unsold non-food goods outright, and similar rules are spreading. Building disposal cost into the write-off calculation is no longer optional in those categories.

Getting the accounting right

Inventory write-offs reduce taxable profit, and they only do so if they are recorded properly and in the right period. The mechanics differ by jurisdiction, and the common failure is the same everywhere: goods that are known to be worthless sit in the inventory ledger at full value for months because nobody made the entry.

That has two effects and both are bad. Your stock figure is overstated, so your gross margin looks better than it is and your reorder points are wrong. And the tax relief lands in the wrong year, which at best is neutral and at worst is a problem if the year it should have landed in was profitable and the year it does land in is not.

The fix is a schedule. A monthly or quarterly write-off run, with a documented reason and a value per line, keeps the ledger honest and creates the audit trail that makes the deduction defensible. Auditors and tax authorities both look at large year-end write-offs with more interest than regular small ones.

Reading the damage log as a diagnostic

A write-off log sorted by cause is one of the more useful documents in a warehouse and one of the least often produced. The categories are few: damaged inbound, damaged in storage, damaged in picking or packing, damaged in transit outbound, damaged by the customer.

Each points at a different fix and a different owner. Inbound damage is a supplier or freight conversation. Storage damage is racking, stacking or environment. Pick and pack damage is training or process. Outbound transit damage is packaging or carrier.

The reason the log matters is that damage rates feel random and usually are not. Most operations that categorise for a quarter find one cause accounting for half the value, and it is rarely the one people assumed. Guessing at this produces expensive packaging upgrades that address a problem which was actually happening in the racking.

Where to go next

The Damaged Goods Write-Off question rarely arrives on its own. These are the ones that usually come with it:

Net Return Rate Calculator — What comes back is not what you get back.
Reverse Logistics Cost Calculator — Labour dominates, not shipping.
Shipping Insurance Cost Calculator — Whether insuring is cheaper than self-insuring.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

How do I calculate a write-off?

Cost of the damaged units, less salvage value recovered, plus disposal cost, less anything recovered from carriers or insurance.

What can I claim from carriers?

Most carriers accept claims for damage in transit within a limited window and up to a liability cap that is usually far below the item's value. Declaring a higher value costs more and raises the cap.