This page is for a retail buyer, a wholesale account manager, a merchandiser who sells to retailers, or a student. It teaches a money question a retailer's buyer answers many times each season: given everything already committed, how much budget is genuinely left for one more range. Lesson 6.3 showed how a brand or factory builds a balanced range plan on one sheet. This lesson turns the sheet around and reads it from the retailer's side, at the retailer's own wholesale price, not the supplier's FOB price. Without this skill, a buyer can be talked into a range that looks affordable against a big original budget, while the true remaining budget is already much smaller because of orders placed earlier in the season. This lesson explains "open-to-buy": the live, shrinking number a retailer must check before committing to any range, however good it looks.
You need: lesson 3.3's wholesale figures for Fairway Stores and Order A are useful background but not required; this lesson repeats what you need from them.
By the end of this lesson you can:
Not covered here: how a range plan sheet is built and balanced (lesson 6.3), and how a committed range becomes individual purchase orders (lesson 6.5).
| Term | Meaning |
|---|---|
| Season budget | The total amount a retailer plans to spend buying stock for one season, set before it sees every brand's final range. |
| Committed spend | The value of purchase orders a retailer has already confirmed against its season budget. |
| Open-to-buy | A retailer's season budget minus its committed spend: the amount still available to commit to any range. |
| Wholesale price | The price a supplier charges a retailer for finished goods, higher than the supplier's FOB price and lower than the retailer's own shop price. |
| Reallocation | Moving open-to-buy that was set aside for one brand or range to a different one instead. |
| Range plan sheet | The one-sheet tool listing every style in a collection, its category, quantity and price, used here to check a retailer's spend against its budget. |
A retailer plans a total budget for a season before it has seen final ranges from every brand it works with. That budget is set from evidence: how the same department sold last season, and what this season's sales targets are, agreed by the retailer's own planning team well before most ranges are shown to a buyer. As the season goes on, the retailer confirms purchase orders against that budget, one brand at a time, and each confirmed order reduces what is genuinely left.
Open-to-buy is simply the total budget minus what has already been committed: a live, shrinking number that decides how much more the retailer can commit, regardless of how good any individual range looks. It is recalculated every time a new order is confirmed, so the figure a buyer should check on a Monday can be smaller than the figure the same buyer checked the previous Monday, even if the total season budget itself never changed. A retailer never judges a new range against its original total budget; it judges it against whatever open-to-buy remains at that moment, because the original budget no longer describes what is actually available to spend.
| What can differ | The shapes you will meet | Why it matters to you |
|---|---|---|
| Total season budget | Set from last season's sales plus this season's sales targets, agreed before most ranges are shown. Can cover one department or a whole chain. | This is the starting number, not the number a new range is judged against once orders exist. |
| Committed spend | Every confirmed purchase order counts, whatever brand it is with. Fairway Stores' wholesale purchase from Northline Apparel (Order A, 15,000 pieces at USD 8.00 wholesale) is exactly this kind of committed spend. | A retailer must add up commitments across every brand, not just the one range in front of it. |
| Open-to-buy | Recalculated each time a new order is confirmed. Can run for a whole season or be split by month or by department. | This is the only figure that correctly tells a buyer what it can still spend. |
| Reallocation | If one brand's range disappoints or a delivery is cancelled, a retailer can move its remaining open-to-buy to a different brand's range instead of leaving it unspent. | Open-to-buy is not locked to the brand it was first set aside for; the retailer decides where it goes. |
Fairway Stores, the department-store chain that buys Northline Apparel's products wholesale, plans a total budget for the season. Before seeing every brand's range, it has already confirmed Order A: 15,000 basic cotton T-shirts at Northline Apparel's wholesale price of USD 8.00 each. That commitment is fixed and already spent against the budget. Fairway Stores' buyer now has to decide how much of what remains it can commit to a new range from a different brand.
The worked numberFor this worked example, say Fairway Stores planned a total season budget of USD 500,000. Its committed spend on Order A alone is:
Fairway Stores' open-to-buy after this one commitment:
This USD 500,000 total and the USD 380,000 open-to-buy are illustrative teaching figures for this worked example, not recorded facts about Fairway Stores; only the USD 120,000 committed on Order A comes from Fairway Stores' own figures.
The methodA common mistake is comparing a proposed new range's cost against the retailer's original total season budget, instead of against its current open-to-buy. A retailer with a large original budget but very little open-to-buy left, because it has already committed most of it elsewhere, genuinely cannot take on a large new range, however good it looks. The live, shrinking number is what matters, not the original one. This is exactly what happens in the workplace scenario below.
A retailer plans a total budget for a season before it sees every brand's range. As it confirms orders, that budget shrinks. Open-to-buy is what is left: total budget minus everything already committed. Fairway Stores committed USD 120,000 to Order A's T-shirts; against a worked total budget of USD 500,000, that leaves USD 380,000 open-to-buy. Any new range must be judged against that USD 380,000, not against the original USD 500,000, because the USD 120,000 is already spent. If one brand's range disappoints, the retailer can move its remaining open-to-buy to a different brand instead.
A sales agent representing a new denim brand shows Fairway Stores' buyer a range worth USD 450,000 wholesale. The agent argues: "Your season budget is USD 500,000, so there's easily room."
Fairway Stores' buyer knows the same range plan sheet already carries one confirmed commitment this season:
Is comparing the new USD 450,000 range against the original USD 500,000 budget the right test? Decide before opening the answer.
No. The right test is against open-to-buy, not the original total budget. Two facts decide this together.
First, the committed spend already on record. Fairway Stores has confirmed Order A's T-shirts at USD 8.00 wholesale × 15,000 pieces = USD 120,000, and likely has other commitments elsewhere in the season that are not shown in this one range plan row.
Second, what open-to-buy that leaves. Using the same worked USD 500,000 season budget as the earlier example, open-to-buy after Order A alone is 500,000 − 120,000 = USD 380,000. The agent's USD 450,000 range is larger than that USD 380,000, even before any other commitment is counted. The agent's comparison against the original USD 500,000 budget ignores everything already committed, and so overstates how much room genuinely remains.
Framed qualitatively, using the same USD 120,000 committed-spend example: if Fairway Stores committed to the new USD 450,000 range without checking its real open-to-buy, and its true remaining figure was, say, USD 200,000 once other commitments besides Order A are included, it would overcommit its season budget.
An overcommitment of this size is a real cash-flow and inventory-risk problem for Fairway Stores: money promised to suppliers beyond what the season budget can cover, and stock arriving that the retailer may not be able to pay for or sell through on time. It is avoidable simply by checking the live open-to-buy number, not the original total budget, before committing to any new range.
The range plan sheet's example row lists Order A at Northline Apparel's FOB price, USD 3.20, because it is built from the supplier's side. A retailer like Fairway Stores reads it differently: take the quantity (15,000 pieces) and apply your own wholesale price, USD 8.00, not the FOB price shown. Do this by hand next to the sheet.
| Question | Order A, read at Fairway Stores' wholesale price | Your order |
|---|---|---|
| Quantity, from the range plan sheet | 15,000 pieces | |
| Price to use (not the sheet's FOB column) | USD 8.00 wholesale | |
| Committed spend | 8.00 × 15,000 = USD 120,000 | |
| Total season budget | Your retailer's own figure | |
| Open-to-buy after this commitment | Budget − 120,000 |
1. What is open-to-buy?
2. Should a new range be judged against a retailer's original total season budget, or its current open-to-buy?
3. A different retailer plans a total season budget of USD 300,000 and has already committed USD 90,000 to confirmed orders. What is its open-to-buy?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| Season budget | ميزانية الموسم | Budget de saison | Sezon bütçesi | The total amount a retailer plans to spend buying stock for one season, set before it sees every brand's final range. |
| Committed spend | الإنفاق الملتزم به | Dépenses engagées | Taahhüt edilen harcama | The value of purchase orders a retailer has already confirmed against its season budget. |
| Open-to-buy | الرصيد المتاح للشراء | Budget disponible (open-to-buy) | Alıma açık bütçe (open-to-buy) | A retailer's season budget minus its committed spend: the amount still available to commit to any range. |
| Wholesale price | سعر الجملة | Prix de gros | Toptan fiyat | The price a supplier charges a retailer for finished goods, higher than the supplier's FOB price and lower than the retailer's own shop price. |
| Reallocation | إعادة التوزيع | Réaffectation | Yeniden tahsis | Moving open-to-buy that was set aside for one brand or range to a different one instead. |
| Range plan sheet | ورقة خطة التشكيلة | Fiche de plan de collection | Koleksiyon planı tablosu | The one-sheet tool listing every style in a collection, its category, quantity and price. |
You now know how a retailer turns its season budget into a live open-to-buy figure before committing to any one range. The next lesson looks at what happens after a commitment is made: how a collection plan becomes the individual purchase orders that factories actually receive. Back to the course map