Reorder point calculator
The stock level at which you have to place the order to avoid running out.
≈ 3 minutes
Work out my reorder point
The real cost of a stockout
Running out of product costs money, but almost never what it seems to. Not all the demand you cannot serve is lost: some waits, some buys something else of yours. And what you lose is not revenue, it is contribution. This calculator separates the two and adds the extraordinary costs almost nobody records.
Every calculation runs in your browser. The figures you type are never sent to a server and are never stored.
Your results will appear here
Enter the days without stock and the daily demand for the affected product.
- Days you had no product
- Units you were selling per day before the stockout
- What share of that demand you believe was lost
Calculation results
Cost of the stockout
—
The contribution you did not get plus the extraordinary costs.
Contribution lost—The real economic cost
Extraordinary costs—
Units lost—
Demand affected—
Revenue not invoiced—Reference, not cost
See the breakdown
| Days out of stock | — |
| Demand affected | — |
| Units lost | — |
| Contribution lost | — |
| Extraordinary costs | — |
| Total cost | — |
Recommended next step
You know what it cost. What prevents the next one is ordering earlier: work out the stock level at which you have to place the order.
Work out my reorder pointResults are estimates based on the information you enter. Fees, taxes and platform terms can change: always check the figure that matters to you against your invoice or the official platform. They do not replace your real invoices, your official accounts or professional tax, financial or legal advice.
What this tool works out
This stockout cost calculator puts a number on something that usually stays at the level of 'we lost a lot'. It turns days without product into unsold units, those units into lost contribution, and adds the extra spending the stockout caused.
Most estimates in circulation multiply days out of stock by daily demand by selling price. That calculation overstates the damage for two separate reasons, and both are corrected here.
Affected demand is not the same as lost sales
Affected demand is everything you could not serve: days out of stock times what you were selling per day. It is the starting point, not the result.
Genuinely lost sales are only part of it. A customer who finds the product sold out can wait for it to come back, accept a substitute from your catalog, or leave and never return. Only the last case is a clean loss.
That is why the calculator asks what share was actually lost instead of assuming 100 %. That percentage is your estimate, and it is the input that moves the result most: be conservative and write down what you based it on.
What you lose is contribution, not revenue
If you fail to sell a $39.90 unit, you do not lose $39.90. That sale would have forced you to buy the product, pack it, ship it and pay fees. What you failed to earn is what would have survived all of that: the contribution.
The calculator shows both figures because both are informative, but only one is the cost. Lost revenue sizes the hole in the shop window; lost contribution is the money missing from the account.
Confusing them is what turns an annoying stockout into an imaginary catastrophe, and it leads to buying safety stock that costs more than the stockouts it prevents.
How the formula works
Two blocks added at the end: what you failed to earn and what you spent extra.
affected demand = days out of stock x daily demand
lost units = affected demand x % genuinely lost / 100
lost revenue = lost units x selling price
lost contribution = lost units x contribution per unit
extraordinary costs = urgent restocking + rush shipping
+ customer service
+ penalties + other
total cost = lost contribution + extraordinary costs
Notice that the total uses lost contribution, not lost revenue. Revenue appears as a reference, but it is never added anywhere.
A worked example
A product selling 14 units a day was out of stock for 6 days. It sells at $39.90 and leaves $15.40 of contribution per unit. An estimated 65 % of demand was lost: the rest waited or bought something else. On top of that there were $220 of urgent restocking, $95 of rush shipping, $60 of customer service, $150 of penalties and $25 of other charges.
| Item | Value |
|---|---|
| Days out of stock | 6 |
| Affected demand | 84 |
| Genuinely lost sales | 54.6 |
| Unrealized revenue | $2,178.54 |
| Lost contribution | $840.84 |
| Extraordinary costs | $550.00 |
| Total stockout cost | $1,390.84 USD |
Affected demand was 84 units, but genuinely lost sales were 54.6. Unrealized revenue adds up to $2,178.54, and yet the real cost is $1,390.84: $840.84 of lost contribution plus $550 of extra spending. Counting revenue as the loss would have inflated the figure by more than 56 %.
The spending a stockout does cause
A stockout does not only stop income: it also makes you spend. These costs are real, can be evidenced with invoices, and usually fall outside the estimates.
- Urgent restocking: the premium for rushing the supplier
- Rush shipping: air or express freight to shorten the lead time
- Customer service: hours spent handling notices, waits and cancellations
- Penalties: whatever a marketplace or a contracted customer applies
- Other costs: anything the stockout made you spend that does not fit above
What this calculator does not invent
It does not estimate reputational damage or the lifetime value of customers who left. Those effects are real, but any number we put there would be invented, and an invented cost contaminates the whole figure.
If you know you lost specific customers and can estimate their value from your own data, calculate it separately and add it with the label it deserves: your estimate, not a result from this tool.
What to decide next
The cost of a stockout is only useful if it changes something. What changes it is ordering earlier: comparing this figure against what a few more buffer units cost is the decision that prevents the next one.
What this assumes
- Prior daily demand is representative of the out-of-stock period
- The lost sales percentage is your own estimate
- Contribution per unit already deducts every variable cost
- Extraordinary costs belong to this stockout only
- Unserved demand is not recovered afterwards
What it does not cover
- Reputational damage, which cannot be estimated honestly
- The lifetime value of customers who did not come back
- The effect of the stockout on marketplace ranking
- Sales displaced onto other products in your catalog
- The cost of holding the stock that would have avoided it
Frequently asked questions
What lost sales percentage should I use?
The one you can defend from what you know about your customers. If the product has substitutes in your own catalog, real loss is low; if it is unique and urgent, it is high. An honest starting point is what happened when the product came back: a spike means part of the demand waited for you.
Why does lost revenue not count as the cost?
Because that sale would have carried costs too. If you do not sell a $39.90 unit, you also do not buy the product, ship it or pay the fee. What you failed to earn is the contribution, and using revenue inflates the cost by more than half.
Which daily demand do I enter?
The average of the days before the stockout, over a period without promotions. If the stockout happened in peak season, use the demand from those days rather than the annual average: running out at the worst moment costs considerably more.
What if the stockout was partial, only some sizes or variants?
Calculate each variant separately with its own daily demand and contribution. Treating them as one product means the combined daily demand overstates the loss, because some customers bought an available variant instead.
Do I include the cost of my own time handling it?
If it is time you spent instead of doing something else and you can value it, put it in customer service. If it is your own fixed salary, which you would draw anyway, including it mixes a fixed cost into the calculation of a one-off event.
Why do you not estimate reputational damage?
Because there is no honest way to put a number on it. It exists, and on marketplaces with ranking algorithms it can be considerable, but any figure we supplied would be invented and would contaminate the rest of the calculation.
How do I use this cost to decide how much stock to hold?
Compare it against what it would cost per year to hold the buffer that would have prevented it. If the stockout costs $1,400 and the buffer costs $300 a year, the buffer is cheap. If the buffer costs $2,000, the stockout may have been the sensible option.
What should I work out after this?
The reorder point, which is what prevents the next one. Knowing what the last stockout cost helps little if you keep ordering when it is already too late.
Official sources
Shopify — stockouts: causes and consequenceshttps://www.shopify.com/blog/what-causes-a-stockout
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