Shrinkage Rate Calculator
Find your inventory shrinkage rate from book versus counted stock, and see the lost value as a share of sales.
How it works
Shrinkage value = book inventory − counted inventory · Shrinkage % of sales = shrinkage ÷ net sales × 100 · Shrinkage % of inventory = shrinkage ÷ book inventory × 100
Shrinkage is the gap between the inventory your records say you have (book) and what a physical count actually finds. The difference — lost to theft, damage, spoilage, vendor fraud and administrative error — is a direct hit to profit. Retailers usually express it as a percentage of sales for benchmarking; the US retail industry average hovers around 1.5%, so a rate well above that signals a loss-prevention or process problem worth investigating.
Worked example
If the books show $120,000 of inventory but a physical count finds $116,400, shrinkage is $3,600. That is 3,600 ÷ 120,000 = 3.0% of inventory, or 3,600 ÷ 300,000 = 1.2% of net sales — just under the typical industry average.
Frequently asked questions
What causes inventory shrinkage?
The main sources are shoplifting, employee theft, administrative and paperwork errors, damage and spoilage, and vendor or supplier fraud. Most retailers find internal and external theft together account for the majority of shrink.
Is shrinkage measured against sales or inventory?
Both are used. Percentage of sales is the standard industry benchmark for comparing stores and chains; percentage of inventory shows how much of your stock value went missing. This calculator reports both.
What is a normal shrinkage rate?
The US retail average is roughly 1.5% of sales, though it varies by category — small, high-value, easily concealed items shrink more. Consistently exceeding the benchmark points to a loss-prevention or process issue.
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Educational estimate, not financial advice.