The Ultimate Boutique Inventory Planner: A Step-by-Step Open-to-Buy Guide
Inventory is your single largest investment as a boutique owner — and the decisions you make about what to buy, how much to buy, and when to buy it will determine whether you end your season with healthy margins or painful markdowns.
The good news? Profitable buying isn't a gut feeling or a guessing game. It's a system — and that system has a name: Open-to-Buy planning.
In this guide, we will walk you through exactly what OTB planning is, how to calculate it, how to apply it to your seasonal buying decisions, and how to avoid the most common mistakes boutique owners make. Whether you're heading into market for the first time or refining your process after years in business, this framework will give you the clarity to buy with confidence.
The Real Cost of Buying Without a Plan
Before we get into the mechanics, let's talk about what's at stake. Most boutique owners know the feeling: you fall in love with a line at market, place a larger order than you planned, and three months later you're staring at a rack of slow-moving product while your cash is tied up and your vendor invoices are due.
This pattern — overbought on some things, understocked on others — is the root cause of most boutique profitability problems. Specifically, it shows up in a few predictable ways:
Cash flow crunches when merchandise arrives and payment is due
Excessive markdowns to clear inventory that didn't sell through at full price
Missed sales because you sold out of your winners too early
Difficulty paying yourself or covering operating expenses in slow months
In short, buying without a plan means you are always reacting instead of deciding. Open-to-Buy planning solves all of these problems by giving you a framework to make buying decisions based on data, not instinct. As a result, it tells you exactly how much inventory you can afford to bring in — and when.
What Is Open-to-Buy Planning?
Open-to-Buy (OTB) is a purchasing budget that determines how much inventory you are authorized to order for a given period. Simply put, it accounts for your planned sales, your existing inventory, and any merchandise you have already ordered but have not received yet.
In other words, think of it as your buying guardrail. Your OTB tells you the maximum dollar amount you should spend on new inventory for a specific time period — typically a month or a season — without overextending your cash or creating excess stock.
Key insight: OTB planning is not about restricting your buying. Instead, it is about buying smarter — putting your dollars where they will generate the strongest return and leaving room to reorder your bestsellers.
When used consistently, OTB planning helps you achieve several important outcomes:
Maintain healthy cash flow throughout the buying and selling cycle
Reduce markdowns by preventing over-ordering on any single category
Stay flexible to reorder winners mid-season without blowing your budget
Walk into market with a clear budget and buying strategy
The OTB Formula Explained
The core Open-to-Buy formula is straightforward. Once you understand each component, calculating your OTB becomes a quick, repeatable process you can run before every buying trip.
THE OPEN-TO-BUY FORMULA
OTB = Planned Sales + Planned EOM Inventory − BOM Inventory − On-Order Inventory
Let's break down each variable:
Planned Sales
To begin, this is your sales forecast for the period. For new boutique owners, use industry benchmarks or your best estimate. For established boutiques, use your historical sell-through data adjusted for current trends. Above all, be realistic — optimistic sales plans lead to over-buying.
Planned End-of-Month (EOM) Inventory
Next, this is the value of inventory you want to have on hand at the end of the period. You need enough stock to support the next month's sales, but not so much that you are carrying excess. As a general rule, a common target is 2 to 2.5 times your average monthly sales.
Beginning-of-Month (BOM) Inventory
From there, this is the retail value of inventory you already have on hand at the start of the period. This number is pulled from your inventory management system or your most recent physical count.
On-Order Inventory
Finally, this is the retail value of merchandise you have already ordered but have not received yet. This number is critical — and easy to overlook. It is tempting to forget about orders in transit when you are at market and excited by new lines.
A Real-World Example: Spring Buying for a Women's Boutique
To see how this works in practice, let us walk through a complete example with real numbers.
For example, say you are planning your April buying for a women's accessories and apparel boutique. Here are the numbers you are working with:
VariableYour NumbersNotesPlanned April Sales$28,000Based on last April + 10% growth targetPlanned EOM Inventory (April 30)$56,000~2x monthly sales — enough to support MayBOM Inventory (April 1)$42,000Current inventory on hand at retail valueOn-Order Inventory$8,500Orders placed at market in Feb, arriving in April
Now, plugging those numbers into the formula:
APRIL OPEN-TO-BUY CALCULATION
OTB = $28,000 + $56,000 − $42,000 − $8,500 = $33,500
As you can see, you have $33,500 in open-to-buy budget for April. In other words, you can place orders up to this amount (at retail value) before you risk over-investing in inventory.
Quick note on retail vs. wholesale: OTB is typically calculated at retail value. Therefore, to convert to what you will actually spend at wholesale, multiply your OTB by your cost percentage. In this case, if your average cost is 50% of retail, your wholesale spend would be $33,500 x 0.50 = $16,750.
Adjusting OTB for Seasonal Trends and Historical Data
The formula gives you a solid starting point. However, smart boutique owners layer in additional context to sharpen their buying plan. Here is how to factor in seasonality and your own store data:
Use Last Year's Sell-Through as Your Baseline
First, look at your historical sell-through rate by category. This data tells you what actually moved at full price versus what required markdowns. For instance, if dresses sold through at 85% last spring but tops only cleared at 60%, that insight should directly influence how you allocate your OTB across categories this season.
Account for Market Timing and Delivery Windows
Additionally, consider your delivery windows carefully. U.S. boutiques typically receive Spring/Summer deliveries between February and July, with core market windows running August through October of the prior year. If you are placing late orders, factor in that customers may already be mid-season — as a result, your sell-through window will be compressed.
Build in a Reorder Reserve
Furthermore, do not spend your entire OTB on initial orders. Experienced buyers typically hold back 15 to 20% of their budget to reorder proven bestsellers mid-season. This flexibility is where you capture your highest-margin sales, so protecting that reserve is worth the discipline.
Adjust for External Factors
Finally, account for anything that changes your sales baseline. Is a new competitor opening nearby? Did you expand your floor space? Are you launching a new category? All of these factors affect your planned sales projections, which in turn cascade through your entire OTB calculation.
The 5 Most Common OTB Mistakes (and How to Avoid Them)
Even boutique owners who understand OTB planning make these mistakes. Fortunately, once you know what to watch for, all five are entirely avoidable:
Over-ordering on bestsellers without checking your OTB. Your top-selling dress from last season might tempt you to double your order. Even so, if your OTB does not support it, that decision will create a cash crunch two months later when the invoice is due. Discipline matters — especially on your winners.
Forgetting on-order inventory. This is the most frequent calculation error. Before every market trip, pull a full report of everything you have ordered that has not yet arrived. For example, one missed purchase order can throw off your entire budget by thousands of dollars.
Using retail OTB without converting to wholesale. Remember, your OTB is calculated at retail value. As a result, if you walk into market with a $40,000 OTB and start writing orders at wholesale prices, you will spend $40,000 at cost — which translates to $80,000 at retail. That is double your budget.
Setting a single OTB for the whole store instead of by category. Similarly, breaking your OTB down by category — dresses, tops, bottoms, accessories — gives you much more control over your product mix. In addition, it prevents one exciting category from consuming budget that should go elsewhere.
5. Underestimating planned markdowns. If you know certain categories historically require markdowns to clear, build that into your planned EOM inventory. In other words, inventory you will need to mark down is worth less than inventory that sells at full price — and your plan should reflect that reality.
Start Buying with Confidence
Open-to-Buy planning is the foundation of profitable boutique inventory management. Once it becomes part of your pre-market routine, you'll walk into every buying trip knowing exactly what you can spend, where to allocate your budget, and how to stay positioned for healthy cash flow throughout the season.
The difference between boutiques that thrive and those that struggle often comes down to this: the ones that thrive buy with a plan.
Ready to build your OTB plan for the upcoming season? Download our complimentary OTB Calculator Template — a pre-built Google Sheets tool that walks you through each variable and calculates your buying budget automatically. Plus, if you'd like a strategic eye on your buy plan before you head to market, The Fashion Hub team is here to help.
Have questions about OTB planning or want to discuss your specific inventory challenges? We'd love to connect.
