Open-to-Buy: The Buying System Every Small Brand Needs

Open-to-buy (OTB) planning is a structured system that calculates how much inventory a brand can afford to buy for a given period, based on forecasted sales, current inventory levels, and planned markdowns. For apparel founders, it replaces gut-feel buying with a number you can actually defend.

If you have ever ended a season with a warehouse full of product you are not sure what to do with — or run out of your bestsellers three months before the season ends — OTB planning is the thing that was missing.

In this guide you will learn what open-to-buy actually means, how to calculate it, what a realistic OTB process looks like for a brand doing under $10M, and why getting this right is one of the highest-impact moves you can make as a founder.

What Is Open-to-Buy Planning?

OTB = Planned Sales + Planned Markdowns + Planned Ending Inventory − Beginning Inventory − On-Order Inventory

Every term in that formula represents a real decision. Planned sales is your forecast. Ending inventory is your target. On-order is what you have already committed to. The gap between those inputs and what you have is exactly how much you can buy.

Why Do Most Small Apparel Brands Skip OTB Planning?

Most founders skip OTB because it sounds complicated — but it is just a formula with inputs you already have.

What they end up doing instead is buying based on how the last season felt, what a sales rep is telling them is trending, or how much cash is in the account at market time. That works until it does not. And when it stops working, it stops working in a big and expensive way — overstock in one category, stockouts in another, cash tied up in product that will not move until you discount it.

How to Calculate Open-to-Buy for an Apparel Brand

Here is a simplified OTB calculation for a brand doing $2M annually across two seasons.

Inputs for Spring (Feb–Jul):

Planned sales: $900,000
Planned markdowns: $90,000 (10% of sales)
Planned ending inventory: $150,000 (target going into Fall)
Beginning inventory: $200,000 (on hand Feb 1)
On-order inventory: $180,000 (already committed to vendors)

OTB = $900,000 + $90,000 + $150,000 − $200,000 − $180,000 = $760,000

That $760,000 is your buying budget for Spring. Not your revenue target. Not what you think you need. It is what the math says you can commit to, given everything else in the picture.

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What Happens When You Do Not Use OTB Planning

Without OTB planning, most apparel brands fall into the same three traps: overbuying on optimism, buying flat when they should buy up, and running out of budget mid-season.

One client came to Retailytics with dead stock sitting at 27% of total inventory. The cause was not bad product — it was buying decisions made without a system, repeated over three seasons. Within 12 months of implementing a structured OTB process, dead stock dropped to 4.2%.

How OTB Planning Works at Different Revenue Levels

OTB planning looks different at $500K versus $5M — but the core formula is the same at every stage.

Under $500K: A single spreadsheet — planned sales by month, current inventory, planned receipts. Keep it simple. The goal is to have a number before you go to market.

$500K–$3M: Monthly OTB by category, not just a seasonal total. This is where most founders start to feel the pain of not having a system.

$3M–$10M: Monthly OTB by category and channel, with variance tracking against plan. If you are here without a planning system, you have been getting lucky or leaving money on the table — probably both.

How to Start Using OTB Planning Without Overcomplicating It

You need three things: a monthly sales forecast, an ending inventory target, and visibility into what is already on order.

With those three things, you can run a basic OTB calculation before every buying trip. It takes 30 minutes the first time. After that, it is a 10-minute check-in before market.

For a complete inventory planning system — including how to build the forecast, manage the season, and track the six metrics that matter — the full guide covers it from start to finish.

Frequently Asked Questions

What does open-to-buy mean in retail?

Open-to-buy is the dollar amount a retailer or brand has available to spend on new inventory purchases for a given period, after accounting for planned sales, existing inventory, and already-committed purchase orders.

Is open-to-buy planning only for large brands?

No. OTB planning is most useful for brands at $500K–$10M, where buying decisions are material enough to affect cash flow but the brand does not yet have a planning team. Enterprise brands have planning departments running OTB models. Small brands need a simpler version of the same system.

How often should I update my OTB plan?

Monthly, at minimum. A good OTB process involves setting the seasonal plan at market, then reviewing it monthly against actual sales and adjusting reorder plans and markdown timing accordingly.

What is the difference between OTB and a buying budget?

A buying budget is a top-line spending limit. OTB is a dynamic calculation that changes as the season progresses — it accounts for how sales are tracking against plan and adjusts what you can still commit to. OTB is a buying budget that thinks.

About the Author

Bellamy Grindl is the founder of Retailytics. She spent 15+ years managing inventory portfolios from $15M to $500M+ at Walmart, Gap, Gilt, Saks Fifth Avenue, and HBC. She works with apparel and product-based founders at $1M–$10M to build planning systems that protect cash and support profitable growth.