--- title: What does excess inventory mean? description: Excess inventory is the value of inventory on hand beyond what might be needed for typical usage --- [![Backbar help center](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/Backbar%20help%20center.svg) ](https://www.getbackbar.com/support) [![Backbar logomark white](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/Backbar%20logomark%20white.svg "Backbar logomark white")](https://www.getbackbar.com) [Submit support ticket](https://www.getbackbar.com/support/ticket) [Sign up](https://backbar.app/signup) # What does excess inventory mean? ### Excess inventory is the value of inventory on hand beyond what might be needed for typical usage.   ![Excess inventory](https://www.getbackbar.com/hs-fs/hubfs/Excess%20inventory.png?width=1596&height=703&name=Excess%20inventory.png)   Excess value is used as an efficiency indicator for money tied up in inventory. A high amount of excess inventory could indicate that there is too much inventory. To calculate excess inventory, we first must calculate each item's usage. The formula for usage is:   **Starting Inventory + Quantity Purchased - Ending Inventory = Usage Quantity**   Therefore, in order to produce a usage quantity for each item (and then calculate excess inventory), you must have done at least two inventory sessions in Backbar so we have a starting and ending quantity, and you must also have placed or entered your orders through Backbar. If you do not see any excess inventory or usage data, refer to [Why don't my items show on usage reports](https://support.getbackbar.com/why-dont-my-items-show-on-usage-reports) for more information.   Once Backbar has usage data for your products, we can calculate excess inventory. Backbar makes the assumption that you should have enough of a product on hand for a month. This is a generous assumption, as often times you need much less, as you can re-order products from vendors or deal with fluctuations in sales.   **Excess inventory = Current Inventory Value - Monthly Average Usage Value**   Put another way, we look at what your current quantity on hand is for each item and subtract how much you typically use in a month. This quantity is the excess, more than you need for a month's worth of product. We then multiply the excess quantity by the cost for each item to get the excess value.   ### Related articles [Why don't my items show on usage reports?](https://support.getbackbar.com/why-dont-my-items-show-on-usage-reports)   [![Backbar](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/Backbar%20logomark%20color.svg)](https://www.getbackbar.com/) **Product** - [Product Tour](https://www.getbackbar.com/product) - [Inventory Management](https://www.getbackbar.com/product/bar-inventory) - [Vendor Purchasing](https://www.getbackbar.com/product/purchasing) - [Product Connect](https://www.getbackbar.com/product/product-connect) - [Point-of-Sale Integration](https://www.getbackbar.com/partners) - [Beverage Operations](https://www.getbackbar.com/product/bar-operations) - [FAQ](https://www.getbackbar.com/faq) - [Pricing](https://www.getbackbar.com/pricing) - [Restaurant Inventory](https://www.getbackbar.com/restaurant-inventory-software) - [Bar Inventory](https://www.getbackbar.com/bar-inventory-app) - [Partners](https://www.getbackbar.com/partners) **Features** - [Toast Integration](https://www.getbackbar.com/partners/toast) - [Square Integration](https://www.getbackbar.com/partners/square) - [Shift4 (Skytab) Integration](https://www.getbackbar.com/partners/shift4) - [Barcode scanning for inventory](https://www.getbackbar.com/barcode-scan-inventory) - [Drink Price Calculator](https://www.getbackbar.com/feature/drink-price-calculator) - [One-Click Purchasing](https://www.getbackbar.com/feature/one-click-purchasing) - [Suggested Par Levels](https://www.getbackbar.com/feature/suggested-par-levels) - [Track Spending](https://www.getbackbar.com/track-vendor-spending) - [Track Usage](https://www.getbackbar.com/feature/usage-reports) - [Invoice Data Capture](https://www.getbackbar.com/feature/invoice-data-capture) - [Shift Notes](https://www.getbackbar.com/feature/shift-notes) ** Academy ** - [Webinars](https://www.getbackbar.com/webinar-signup) - [Bar Inventory](https://www.getbackbar.com/how-to-do-bar-inventory-guide) - [Wine Knowledge](https://www.getbackbar.com/basic-wine-knowledge) - [Liquor Cost](https://www.getbackbar.com/liquor-cost-bars-restaurants) - [Bartender Training](https://www.getbackbar.com/bartender-training-guide) - [Restaurant Management](https://www.getbackbar.com/restaurant-and-bar-management-guide) - [State Liquor Control](https://www.getbackbar.com/liquor-control-information) - [Insights](https://www.getbackbar.com/insights) - [Information Hub](https://www.getbackbar.com/bar-inventory-faq) - [Courses](https://www.getbackbar.com/backbar-courses-homepage) ** About ** - [Our Story](https://www.getbackbar.com/about-backbar) - [Press](https://www.getbackbar.com/press) - [Careers](https://www.getbackbar.com/careers) - [Contact](https://www.getbackbar.com/contact) - [Help Center](https://www.getbackbar.com/support) © 2025 Backbar [Terms of Service](https://www.getbackbar.com/legal/terms-of-service) [Acceptable Use](https://www.getbackbar.com/legal/acceptable-use-policy) [Privacy Policy](https://www.getbackbar.com/legal/privacy-policy) **Follow us ** [![Find us on Facebook](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/facebook.svg)](https://www.facebook.com/BackbarApp/) [![Find us on Twitter](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/twitter.svg)](https://twitter.com/Getbackbar) [![Find us on Instagram](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/Instagram.svg)](https://www.instagram.com/getbackbar/?hl=en) **Apps** [![Download from the Apple Store](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/apple.svg)](https://apps.apple.com/us/app/backbar/id1461796151) [![Google Play Store](https://www.getbackbar.com/hubfs/Web%20Design%20Assets%20/Backbar%20Logos/android.svg)](https://play.google.com/store/apps/details?id=com.backbar&hl=en_US&gl=US&pli=1)