The Ideal Amount to Spend on Your Cell Phone Repair Shop Inventory

Have you ever wondered how much you should spend on your repair store inventory?

Running any business requires maintaining a favorable budget and ensuring healthy cash flow. As a repair store owner, you must balance demand, supply, and cost to stay afloat.

So, what is the ideal product in dollars you should have at your disposal? 

The answer depends on the size of your business, the volume of repairs, and the variety of products and services you offer. These factors help you forecast the demand for each product or spare part at your repair store. 

As a general guideline, you need to maintain inventory levels that cover around 30 to 60 days of average revenue. For instance, if your monthly revenue is $10,000, you need to have inventory worth approximately $5,000 to $10,000 in your store.

According to industry experts, you must always have just the right amount of accessories and spare parts depending on your sales volume.

Considering the retail side of your business, the aim is to sell as much as possible. Here, breaking down your inventory into different levels allows you to manage costs more efficiently. For example, you have high-turnover items, slow-running items, and high-cost items. 

High-turnover items

For high-turnover items like common cell phone repair parts and accessories, you can use a 30-days of revenue formula. So, if your monthly revenue is $10,000, you should have around $3,000 to $5,000 worth of these items on hand. 

Slow-running items

On the other hand, for accessories or spare parts that are not sold that frequently, you need to go with a different strategy. Here, you have a slower turnover rate, so the amount should be calculated using the 60 days of revenue formula.

If you’re struggling with the turnover ratio, it is the rate at which your inventory sells relative to the COGS (Cost of Goods Sold). This will help you understand if your stock levels are appropriate and if you’re turning over your inventory efficiently. 

Moreover, you can use the following formula to calculate the EQQ (Economic Order Quantity) for your repair store. 

EOQ = √ {((DD x2) * SS)/HH} 

Where:

DD = Annual demand for the item 

SS = Ordering cost per order 

HH = Holding cost per unit per year 

Lastly, it’s also important to maintain some extra inventory to account for variations in demand. This safety stock also helps you cover up for supply delays and ensure that your customers always get the best experience at your repair store.

To streamline your inventory and automate parts ordering, incorporate RepairDesk POS into your repair store system.