Equal allocation rewards slow, bulky inventory
Dividing total storage fees equally across SKUs disconnects cost from the products occupying space. A compact fast-moving item can appear less profitable while a bulky slow-moving item escapes the cost it created.
Use volume and time as the base
- Capture average stored units or inventory snapshots by SKU.
- Multiply units by the packaged volume for the same period.
- Apply the relevant storage cost to the volume-time base.
- Separate aged-inventory or other exceptional charges from ordinary monthly storage.
Convert the result into a decision metric
Review storage cost per unit sold and storage cost as a percentage of net sales. These measures connect space consumption with velocity and show whether a price, reorder, promotion, or exit decision is needed.
Update the assumption seasonally
Storage economics can change with rates, season, inventory age, and sell-through. Use current reports and marketplace guidance for the period being analyzed rather than relying on one annual average for every month.