Open-to-buy is the budget a retailer has left to spend on new stock for a given month. It stops you from buying more than you can sell, and shows where the money should go. Here is how to calculate it and plan it by category.
The open-to-buy formula
Open-to-buy = planned sales + planned markdowns + planned end-of-month stock − stock at the start of the month − stock already on order
Keep every figure on the same basis, either all at cost or all at retail. Mixing them is the most common error. Some retailers leave out planned markdowns, which gives a simpler and slightly lower figure.
A worked example
| Item | Amount |
|---|---|
| Planned sales | $40,000 |
| Planned markdowns | $2,000 |
| Planned end-of-month stock | $90,000 |
| Stock at the start of the month | −$85,000 |
| Stock already on order | −$20,000 |
| Open-to-buy | $27,000 |
You can commit another $27,000 this month. If $50,000 were already on order, the answer would be −$3,000, which means you are overbought. Hold or cancel orders until the category sells down.
How to set planned end-of-month stock
Decide how many weeks of supply you want at month end, then multiply by the weekly sales you expect next. In the example above, 10 weeks of supply at $9,000 a week gives $90,000.
Plan by category
A single store-wide number hides the problem. Here is the same calculation for three categories:
| Category | Planned sales | Markdowns | End stock | Start stock | On order | Open-to-buy |
|---|---|---|---|---|---|---|
| Apparel | $40,000 | $2,000 | $90,000 | $85,000 | $20,000 | $27,000 |
| Footwear | $25,000 | $1,000 | $60,000 | $70,000 | $10,000 | $6,000 |
| Accessories | $15,000 | $500 | $20,000 | $30,000 | $8,000 | −$2,500 |
Accessories is overbought even though the store as a whole has money to spend. Use GMROI and sell-through to decide which categories deserve the budget.
Prefer not to build it yourself? Use the free open-to-buy calculator.
In a spreadsheet
With planned sales in B, markdowns in C, end stock in D, start stock in E and on order in F:
Open-to-buy (G2): =B2+C2+D2-E2-F2
Common mistakes
- Forgetting stock already on order.
- Basing planned sales only on last year, with no adjustment for what is selling now.
- Setting the plan once a season and not updating it monthly.
- Treating a positive number as an order to spend it.
Where the Optimization Lab fits
Store health in the Statadventure Optimization Lab works out open-to-buy for each category for the next 3 months, from your Shopify, Square, Lightspeed or Clover exports, and every plan includes it. It uses the simpler formula without markdowns, and you set the target weeks of supply. See our page on retail inventory management software.
Calculate open-to-buy from your own exports
The live demo needs no account. Use the sample company or load your own files, which stay in your browser tab.
Frequently asked questions
What does open-to-buy mean?
The amount a retailer can still spend on new stock in a period and end that period at its target inventory level.
What does a negative open-to-buy mean?
You have more stock and orders than the plan calls for. Hold back or cancel orders until the category sells down.
Should open-to-buy be at cost or at retail?
Either works, as long as every figure uses the same basis.
Try the Statadventure live tools
Inventory tools for US manufacturers: reorder point, safety stock, EOQ and landed cost, with the inputs and assumptions shown.
Open the live tools