Free tool
Open to buy calculator for retail buying
Enter your retail sales and stock plan to see how much you can still buy this month without overstocking, at retail and at cost.
Your buying plan, at retail
Enter every amount at retail value. After the first month, each month starts from the previous month's planned ending inventory.
| Month | Planned sales | Markdowns | Planned end of month | On order | Open to buy | Remove |
|---|---|---|---|---|---|---|
| 1 | $45,000 |
Open to buy at retail
$45,000
- Open to buy at cost
- $20,250
At cost is the retail figure times one minus the initial markup.
The formula
Open to buy (retail) = planned sales + planned markdowns + planned EOM stock − BOM stock − on order
Open to buy (cost) = open to buy (retail) × (1 − initial markup %)
- Planned sales
- Sales you plan for the month, at retail.
- Planned markdowns
- Retail value you expect to lose to markdowns and promotions in the month.
- Planned EOM stock
- Stock you want on hand at the end of the month, at retail.
- BOM stock
- Stock on hand at the beginning of the month, at retail. After the first month it is the previous month's planned EOM.
- On order
- Purchases already placed that will arrive in the month, at retail.
- Initial markup %
- Markup on retail price: (retail − cost) ÷ retail. It converts retail open to buy to cost.
Worked example
- A boutique plans $60,000 of sales next month at retail, expects $5,000 of markdowns, and wants to end the month holding $120,000 of stock.
- It starts the month with $110,000 on hand and already has $30,000 on order.
- Open to buy at retail is $60,000 + $5,000 + $120,000 − $110,000 − $30,000 = $45,000.
- At an initial markup of 55%, that is $45,000 × (1 − 0.55) = $20,250 to spend at cost.
When it applies
- Department or category buying budgets in retail, planned month by month at retail value.
- Checking a buy against the plan before the purchase order goes out.
When it breaks down
- When the sales plan is set once and never revisited: open to buy is only as good as the sales and stock plan behind it.
- When retail and cost figures are mixed in the same calculation.
- When receipts land in a different month from the one they were budgeted to, which moves the stock between months.
Common mistakes
Forgetting stock already on order
Orders placed but not yet received still use up the budget. Leaving them out double-spends it.
Leaving out markdowns
Markdowns reduce the retail value of stock just as sales do. Without them, open to buy comes out too low and the floor runs thin.
Mixing cost and retail
Every input is at retail. Convert to cost only at the end, with the initial markup.
Questions
What is open to buy in retail?
Open to buy is the amount a retail buyer can still spend on stock for a period without going over the plan. It is the planned stock need for the month, less what is already on hand and on order.
What is the open-to-buy formula?
Open to buy = planned sales + planned markdowns + planned end-of-month stock − beginning-of-month stock − stock on order, all at retail. Multiply by one minus the initial markup to express it at cost.
How often should I calculate open to buy?
Most retailers plan it monthly by department and update it whenever actual sales, receipts or orders change the picture, which in practice is weekly during a busy season.
How does open to buy prevent overstocking and stockouts?
It ties every purchase to a sales and stock plan. A negative figure means you are already overbought for the month; a positive one is the room left to buy. It does not forecast demand itself, so it is only as good as the sales plan it starts from.
What is the difference between the basic open-to-buy formula and the one with markdowns?
The basic formula uses planned sales, planned end-of-month stock, beginning stock and stock on order. The fuller version adds planned markdowns, because markdowns reduce the retail value of stock the same way sales do.
Related
Published by Skuvelo. Results are estimates computed from the figures you enter, not a reading of your own sales or stock.
A calculator answers once. Skuvelo keeps answering.
This tool computes one number from what you type. Skuvelo computes it continuously, for every SKU, from your own sales and stock.