Open to buy calculator for retail merchandise budgets
Work out how much merchandise budget remains for the period after planned sales, target closing stock and orders already placed. Every figure stays at retail value and nothing you enter is saved.
Open to buy (OTB) is the amount of merchandise a retailer can still order for a period without ending up with more stock than the plan allows. It is a budgeting control, stated at retail value, and most stores run it month by month. This free tool takes four planned figures and returns the purchase budget before and after the orders you have already placed.
The calculation uses only the figures you type. It does not read your inventory or POS data, and nothing you enter is saved or sent anywhere.
How to use this calculator
- Enter Planned sales for the period, at retail: the sales you expect to ring up during the month or season, at selling prices.
- Enter Planned end-of-period inventory, at retail: the stock you want on hand when the period closes, at selling prices.
- Enter Beginning inventory, at retail: the stock on hand when the period opens, at selling prices.
- Enter Stock already on order, at retail: purchase orders placed but not yet received, at the prices you will sell the goods for.
- Select Calculate. To load the sample figures first, select Use example.
Each field accepts a number from 0 to 1,000,000,000. The tool does not check whether the figures belong to the same period, so confirm that before you read the result. Results show labeled values and the step-by-step arithmetic.
Open to buy formula
The method has two steps. First, work out how much you need to buy to reach the planned end stock. Then subtract what is already committed.
Planned purchases = planned sales + planned end inventory − beginning inventory
Open to buy = planned purchases − stock already on order
Every figure is at retail value for the same period. Mixing cost and retail figures, or a month of sales with a season of inventory, produces a budget that is wrong by the difference. Retailers who keep inventory at cost can use the method, but they need a consistent markup to convert cost figures to retail before entering them. If markup varies by category, run the calculation per category.
Worked open to buy example
| Input | Sample value |
|---|---|
| Planned sales for the period, at retail | $40,000 |
| Planned end-of-period inventory, at retail | $30,000 |
| Beginning inventory, at retail | $35,000 |
| Stock already on order, at retail | $10,000 |
Adding $40,000 planned sales to $30,000 planned end inventory gives $70,000 of stock the store needs over the period. Subtracting the $35,000 on the floor at the start leaves planned purchases of $35,000. The $10,000 on order is committed, so the store has an open to buy of $25,000 at retail value for the rest of the period. The results panel shows "Open to buy" $25,000 and "Planned purchases before orders" $35,000.
Reading a negative result
When orders already exceed planned purchases, the result is negative. The step text says by how much and suggests delaying or canceling orders, or revising the plan, before buying more. A negative figure is a signal, not a verdict. If sales are running ahead of plan, the right response may be to raise planned sales rather than cancel stock. If sales are behind, extra receipts will push end inventory above plan and the surplus will need markdowns later.
Open to buy planning works best alongside the rate at which stock is moving. The sell-through calculator shows what share of received units sold, the days of supply calculator shows how long current stock lasts, and the inventory turnover calculator relates cost of goods sold to average inventory at cost. When the budget allows a purchase, the purchase order generator drafts the document. Our open to buy guide covers how to build the plan the figures come from.
Frequently asked questions
What is open to buy in retail
It is the merchandise budget still available to spend for a period after allowing for planned sales, the stock level you want at the end, the stock you started with and orders already placed. The open to buy meaning in most stores is a monthly figure, reviewed weekly, so buyers can see how much of the month's budget is committed. The open to buy definition used by this tool is the retail-value version, which is the common one in merchandise planning.
How to calculate open to buy at cost
Run the same arithmetic with every figure at cost, or convert retail figures to cost using the category's planned markup. IRS Publication 334 describes how beginning inventory, purchases and ending inventory at cost flow into cost of goods sold (irs.gov), which is the cost-side mirror of this formula. The weakness of a cost-based budget is that markdowns change retail value without changing cost, so the plan drifts unless markdowns are tracked separately.
Do I need software for open to buy
Not for a single store with a handful of categories. A monthly spreadsheet or this otb calculator covers it. Dedicated open to buy software earns its keep when there are many categories, several locations and buyers who need the same plan updated as receipts arrive. headoffis is not OTB software; this page is a free calculator, and the related tools above cover stock movement rather than merchandise planning. Shopify's retail math reference lists related formulas such as inventory turnover and GMROI, which use cost figures and should not be mixed into a retail-value plan.
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