Inventory Shrinkage Calculator
Stock lost between the record and the shelf.
Shrinkage
$1,500
3.0% of recorded inventory
At a 20.0% net margin, recovering $1,500 of shrinkage needs $7,500 of additional sales. Prevention is far cheaper than compensation.
How the Inventory Shrinkage Calculator works
Shrinkage is the gap between what your records say you have and what a count finds. It comes from theft, damage, administrative error and supplier shortfalls — and because it is pure loss, its effect on profit is far larger than its size suggests.
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 is shrinkage calculated?
(Recorded inventory − physical inventory) ÷ recorded inventory × 100. Records showing £50,000 against a count of £48,500 is £1,500 of shrinkage, a rate of 3%.
What is a normal shrinkage rate?
Retail industry surveys typically report 1-2% of sales. Ecommerce with controlled warehousing usually runs lower; high-value or easily concealed goods run higher. Above 3% warrants investigation.
Why does shrinkage hurt profit so much?
Because it is a total loss with no offsetting revenue. At a 20% net margin, £1,000 of shrinkage requires £5,000 of additional sales to recover. It is one of the few costs where prevention is unambiguously cheaper than compensation.
What causes most shrinkage?
Split roughly between theft, administrative and paperwork error, and damage, with the mix varying by business. Ecommerce operations often find receiving errors and miscounts dominate rather than theft — which is encouraging, because those are fixable with process.