Free tool
ABC analysis calculator for inventory
Paste your SKUs with annual usage and unit cost, and the calculator ranks them by annual value and splits them into A, B and C classes using cut-offs you control.
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Calculator
What this ABC analysis calculator does
ABC analysis ranks your products by annual value so you can see which few carry most of the money. This ABC analysis calculator takes three columns per line, separated by commas:
- SKU – your product code or name.
- Annual usage quantity – units used or sold over the last 12 months.
- Unit cost (R) – current cost price per unit, in the same unit of measure as the quantity.
It then multiplies usage by cost, sorts the lines from highest to lowest value and works out each SKU's share of the total and a running cumulative share. By default, SKUs up to 80% of cumulative value are class A, those up to 95% are class B and the rest are class C. You can change both cut-offs.
The method, step by step
- Annual value. For each SKU, annual usage × unit cost.
- Rank. Sort all SKUs by annual value, highest first.
- Share. Divide each SKU's value by the total value of all SKUs.
- Cumulative share. Add the shares down the list as a running total.
- Classify. Assign A, B or C depending on where the cumulative share falls against your cut-offs.
Worked example: a food and beverage wholesaler
A Durban wholesaler pastes seven lines. The calculator sorts them and produces this table.
| SKU | Annual usage | Unit cost | Annual value | Share | Cumulative | Class |
|---|---|---|---|---|---|---|
| Sunflower oil 5 L | 2,000 | R110 | R220,000 | 44.0% | 44.0% | A |
| Maize meal 10 kg | 1,500 | R120 | R180,000 | 36.0% | 80.0% | A |
| Rooibos tea 80s | 1,000 | R45 | R45,000 | 9.0% | 89.0% | B |
| Tomato sauce 700 ml | 1,200 | R25 | R30,000 | 6.0% | 95.0% | B |
| Spice mix 200 g | 500 | R30 | R15,000 | 3.0% | 98.0% | C |
| Paper serviettes | 400 | R20 | R8,000 | 1.6% | 99.6% | C |
| Toothpicks 1000s | 200 | R10 | R2,000 | 0.4% | 100.0% | C |
Total annual value is R500,000. Two SKUs, sunflower oil and maize meal, account for R400,000, exactly 80% of the total, so they are class A. Rooibos tea and tomato sauce add R75,000 and take the running total to R475,000, or 95%, so they are class B. The last three lines add R25,000, 5% of the value, and are class C.
Notice that tomato sauce moves more units (1,200) than rooibos tea (1,000) but ranks below it, because the tea costs R45 a unit against R25. ABC analysis ranks by money, not by how often something is picked.
How to choose your thresholds
The 80% / 95% default is a common starting point, not a law. Look at the result and ask whether it is workable:
- A list too long? If 300 SKUs land in A, you cannot count them all monthly. Lower the A cut-off, for example to 70%.
- A list too short? If one or two SKUs dominate, raise the A cut-off so the next important lines also get close attention.
- Keep the cut-offs fixed between reviews. If you change them each quarter, you cannot tell whether a SKU moved class because demand changed or because the rules did.
For a fuller walkthrough, including other value measures such as pick frequency and margin, read our guide to ABC analysis for warehouse inventory.
What to do with each class
| Policy | A items | B items | C items |
|---|---|---|---|
| Cycle count frequency | Monthly or more often | Quarterly | Twice a year |
| Reorder point review | Weekly | Monthly | Quarterly |
| Variance investigation | Every variance | Above an agreed rand value | Above a higher threshold |
| Purchasing attention | Named buyer, active supplier follow-up | Standard process | Consolidated, less frequent orders |
Use the reorder point calculator to set tighter safety stock for A items, and the stock take variance calculator to check how accurate your A-item counts really are. Our guide to cycle counting vs stock take shows how to build a count schedule around the classes.
The limits of ABC analysis
- It ignores risk. A cheap part that stops a customer's line, or a regulated medicine, may need A-level control despite a C ranking. Record these exceptions and the reason.
- It looks backwards. It uses past usage, so new products and planned promotions are under-represented.
- It is only as good as the data. Stale cost prices or unit-of-measure errors, such as a box entered as a single, will put SKUs in the wrong class.
- It hides seasonality. A product that sells only in December can look like a C item over a full year. Seasonal businesses may need a peak-season view.
- It does not plan your layout. Ranking by value says nothing about pick frequency, so use a separate view when deciding pick-face locations.
Getting the data from VasKem
VasKem WMS keeps the inputs this calculator needs: product records with SKU, cost price, category and unit of measure, plus stock balances and movement history per warehouse. Export the data, paste it here, and use product categories to group items by class if that suits your process. Stock takes with automatic variance calculation and admin approval help you keep A-item balances accurate. See the modules on the features page.
Frequently asked questions
What data do I need for an ABC analysis?
For each SKU you need the quantity used or sold over a period, usually the last 12 months, and its current unit cost in rand. Most systems and spreadsheets can export both. Leave out discontinued items you no longer stock, and make sure every quantity uses the same unit of measure as its cost.
Should I use cost price or selling price?
Use one or the other, never both in the same ranking. Cost price shows where your cash is tied up, which is the usual purpose for stock control. Selling price or margin is useful for a commercial view, but run it as a separate analysis.
How many A items should I have?
Enough that you can genuinely give each one closer attention. If your A list runs to hundreds of SKUs and your team cannot count them monthly, lower the A cut-off until the list is manageable. The thresholds are a tool, not a rule.
What happens to items with zero usage?
They have no annual value, so they land at the bottom of the C class. Do not ignore them. Zero-usage stock is often dead or obsolete stock that ties up cash and space, so review it separately and decide whether to clear, return or write it off.
Does VasKem calculate ABC classes automatically?
No. VasKem stores product cost prices, stock balances and movement history, and lets you export data, so you can run this calculator or a spreadsheet on it. If you want ABC classes calculated inside the system, a custom report can be scoped by our software team.
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