The open-to-buy formula
Open-to-buy (OTB) is the dollar amount of new merchandise you can still order for a period without going over your inventory plan. At retail value, for a single month, it is:
OTB = Planned Sales + Planned Markdowns + Planned EOM Inventory − BOM Inventory − Stock on Order
The first three terms are everything your inventory needs to cover this month (what you will sell, what you will mark down, and what you want left on the shelf at month-end). The last two are what you already have or have coming. Whatever is left is what you are free to buy.
A worked example
Say you plan $50,000 in sales and $5,000 in markdowns, want $120,000 of inventory at month-end, are starting with $110,000 on hand, and already have $20,000 on order:
- Needs: 50,000 + 5,000 + 120,000 = $175,000
- Already have / coming: 110,000 + 20,000 = $130,000
- Open-to-buy: 175,000 − 130,000 = $45,000
You can still place $45,000 of new orders this month at retail and stay on plan. If the number had come out negative, you would be overbought, a signal to pause ordering or plan markdowns.
OTB is a plan, not a limit set in stone. Smart buyers recalculate it as sales and receipts come in, which is exactly what Vendee Pro does automatically once your POs flow through.
From a spreadsheet to live open-to-buy
This calculator is great for a one-off check. Doing it by hand every month across categories and locations is where it falls apart. Open-to-buy planning in Vendee Pro tracks your OTB live: set budgets by category and location and watch on-order and remaining OTB move in real time as purchase orders are drafted, sent, and received against your Shopify inventory.
Frequently asked questions
What is open-to-buy?
Open-to-buy (OTB) is the amount of new merchandise a buyer can still order for a period without exceeding the inventory plan. It is the budget left to spend after accounting for planned sales, markdowns, target ending inventory, current inventory, and stock already on order.
What is the open-to-buy formula?
OTB (at retail) = Planned Sales + Planned Markdowns + Planned End-of-Month Inventory − Beginning-of-Month Inventory − Stock on Order.
Should I calculate OTB at cost or at retail?
Either works as long as you are consistent. This calculator uses retail value, which is the most common approach for monthly merchandise planning. To work at cost, enter every figure at cost instead.
What does a negative open-to-buy mean?
A negative OTB means you are overbought: your current inventory plus stock on order already exceeds the plan. Hold off ordering, or plan markdowns to bring inventory back in line.
Stop recalculating OTB by hand.
Get started with Vendee Pro and track open-to-buy live across every category and location.
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