Open to Buy Calculator
What is left to spend this season, at retail.
Calculate open to buy from planned sales, markdowns, closing stock and what is already on order, so a buy is not committed twice.
Leaving this out is the classic error — it always overstates what is left to spend.
Open to buy
$85,000
at retail, $105,000 planned
This is at retail, which is the planning convention. Convert to cost with your initial markup when you need the cash commitment rather than the retail value.
How the Open to Buy Calculator works
Open to buy is the budget still available to commit for a period, expressed at retail. The formula is planned sales plus planned markdowns plus planned closing stock, less opening stock and anything already on order — and the markdown line is the one that gets dropped, which always overstates what is left to spend.
Also known as: OTB calculator · retail buying budget calculator · merchandise budget calculator
Why markdowns belong in the formula
Open to buy is planned sales plus planned markdowns plus planned closing stock, less opening stock and anything already on order. The first three are what has to leave or remain; the last two are what you already have or have promised to take.
The markdown term is the one that gets dropped, and dropping it always overstates the budget. Stock that is marked down leaves the building at less than the retail value it was carried at, so the plan has to replace that lost value as well as the value that sold at full price.
Everything is held at retail because that is how the rest of the plan works — sales, stock and markdowns are all retail figures, so a budget in the same units is directly comparable. Converting to cost is a separate step using the planned initial markup.
A worked example
Planned sales of 100,000, planned markdowns of 15,000, planned closing stock of 80,000, opening stock of 90,000 and 20,000 already on order.
Planned purchases are 100,000 + 15,000 + 80,000 − 90,000 = 105,000. Less the 20,000 committed, open to buy is 85,000. Omitting the markdown line would have given 70,000 of purchases and 50,000 of open to buy — a 35,000 understatement of what the plan actually needs, which in practice shows up as empty rails in week nine.
Where the answer misleads
Open to buy is only as good as the sales plan underneath it, and sales plans are optimistic. A plan built on last year plus a growth assumption, with no allowance for the growth not arriving, produces an OTB that funds an overbuy.
It is also a snapshot. Recalculating monthly with actual sales and actual stock is what makes it useful; calculated once at the start of a season it becomes a number nobody revisits until the markdowns start.
Finally, a negative OTB is information rather than an error. It says the buy is already committed beyond the plan, and the honest responses are to cancel, delay, or accept it and plan the markdowns — not to quietly raise the sales plan until the number turns positive.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
What is the open to buy formula?
Planned sales + planned markdowns + planned closing stock − opening stock − stock on order. The result is what you can still commit at retail value for the period.
Why are markdowns in the formula?
Because marked-down stock leaves at less than its retail value, so the plan has to replace that value as well as the value sold at full price. Leaving markdowns out consistently overstates open to buy and leads to overbuying.
What if open to buy is negative?
You are overbought: more is committed than the plan supports. The options are to cancel or delay orders, raise the sales plan if it is genuinely conservative, or accept the overbuy and plan the markdowns it will need.
Should open to buy be at cost or at retail?
Retail is the convention, because the plan is built from sales and stock at retail. Convert to cost with your planned initial markup when you need to know the cash commitment.