How to set open-to-buy, step by step

1. Start from the financial plan

Open-to-buy sits inside your merchandise financial plan, so start there: the planned sales, planned markdowns, and planned end-of-month (EOM) stock for the period you are buying for. OTB is not a number you invent — it falls out of the plan you have already set.

2. Pull beginning-of-month stock and on-order

Get the beginning-of-month (BOM) stock you will actually start the period with, and the merchandise already on order to land in the period. These are what you have already committed — the buy you have left is everything the plan needs beyond them.

3. Apply the OTB formula

Open-to-buy (at retail) = planned sales + planned markdowns + planned EOM stock − BOM stock − on-order. The first three are what the period must supply; the last two are what you already have or have committed. The difference is what you can still buy.

4. Convert retail OTB to cost

The formula gives OTB at retail. To place orders, convert to cost by applying your planned initial markup: OTB at cost = OTB at retail × (1 − IMU%). Buyers commit dollars at cost, so this is the number that governs the actual purchase.

5. Read the result and act

A positive OTB is room left to buy; zero means you are exactly on plan; negative means you are overbought — committed to more stock than the plan supports. Positive OTB is a buying opportunity; negative OTB is a signal to cancel, delay, or push receipts, not to keep writing orders.

6. Recalculate as the period trades

OTB is not set once. As sales come in above or below plan and receipts land, recalculate — weekly or monthly — so the number reflects reality. An OTB set in month one and never revisited is how teams end a season overbought without noticing.

A worked example

Say a category plans, at retail: sales of $120k, markdowns of $15k, and planned closing (EOM) stock of $200k. It begins the period with $180k of stock (BOM) and already has $40k of merchandise on order. Then:

OTB (retail) = 120 + 15 + 200 − 180 − 40 = $115k

At a 60% initial markup, OTB at cost = 115 × (1 − 0.60) = $46k left to spend. If the on-order figure were $250k instead of $40k, OTB would be −$95k — overbought, and a signal to cancel or push receipts rather than buy more.

Keeping OTB aligned as you trade

The formula is simple; keeping it true is the hard part. OTB only means something if it reflects current receipts and open orders — and in a spreadsheet the OTB workbook, the receipt log, and the PO system are usually separate files, so the number drifts the moment one changes without the others. That is how a plan reads healthy while the brand is quietly overbought. The value is in one connected view where the OTB, the WSSI, and the buy stay in sync. See OTB vs WSSI for how the two fit together, and grab the OTB template to start from a structured sheet.

• ✓Open-to-buy is how much you can still buy for a period without exceeding plan — a budget guardrail, not a buy plan.
• ✓OTB (retail) = planned sales + planned markdowns + planned EOM stock − BOM stock − on-order; convert to cost with (1 − IMU%).
• ✓Positive OTB is room to buy; negative OTB means overbought — cancel, delay, or push receipts rather than keep ordering.
• ✓Recalculate OTB weekly or monthly as sales and receipts move, or it goes stale and hides an overbought position.
• ✓OTB is only trustworthy when it stays in sync with the WSSI, receipts, and POs — which is where disconnected spreadsheets break.

• Use the free open-to-buy calculator →
• Download the open-to-buy template →
• OTB vs WSSI — how they fit together →
• Initial markup (IMU) calculator →
• Retail math formulas reference →

Frequently asked questions

What is open-to-buy?

Open-to-buy (OTB) is the amount of inventory a retailer or apparel brand can still purchase for a period after accounting for planned sales, planned markdowns, planned closing stock, the stock it starts with, and merchandise already on order. It is a budget control that answers "how much more can I buy without exceeding plan."

How do you calculate open-to-buy?

Open-to-buy at retail = planned sales + planned markdowns + planned end-of-month stock − beginning-of-month stock − merchandise on order. Convert to cost by multiplying by (1 − initial markup %). For example, planned sales 120, markdowns 15, planned EOM 200, BOM 180, on-order 40 gives OTB at retail = 120 + 15 + 200 − 180 − 40 = 115.

What does negative open-to-buy mean?

Negative OTB means you are overbought — your beginning stock plus what is already on order exceeds what the plan needs for the period. It is a warning to cancel or delay orders, push receipts to a later period, or reforecast, rather than to keep buying. Ignoring negative OTB is a direct path to excess stock and markdowns.

How often should you recalculate open-to-buy?

As often as the plan changes — most apparel teams review OTB weekly or monthly through the season. Sales rarely land exactly on plan, and every receipt shifts the picture, so an OTB that is not refreshed drifts out of date quickly. Recalculating on a cadence is what keeps buying aligned to actual trade.

Can you manage open-to-buy in a spreadsheet?

You can, and many teams do. It gets hard when OTB has to stay in sync with the WSSI, receipts, and purchase orders across many categories and channels — the OTB workbook and the systems holding receipts and POs are usually separate, so the number goes stale the moment something changes and is not re-keyed everywhere.