The addional costs of excess items
04/24/2008
The excess components not only pose an extra costs in terms of the warehouse and other depreciation costs, but also the opportunity costs that you could have made and saved while investing in some other products too. For example, if you are offered by a client to get a payment by keeping his products in your shop. The amount paid by him is 10 times larger than you would get by selling the inventory in your shop. This ten times cost for your product is regarded as the opportunity cost.
The obsolete electronic components pose heavy opportunity costs on you. At times, these costs are recoverable or at times they are not. In case if it’s too costly to put aside your old excess stock, you may lose some excellent business chances. The opportunities would have caused a great business success and higher margins to you as well.
If you know on time how to make a clearance to excess stock, you will get higher profit margins and increased business choices too. You may explore some more customers that are ready to pay you higher margins for just selling their products, for which they don’t have enough space in their houses.
Why not should you avail the best chances and get rid of your excess items? You may get higher returns by keeping the other customer’s products in your shops and making the best use of your current business.