Open-to-buy is a limit on inventory commitments for a defined period, not an instruction to spend every available dollar. For a jewelry boutique, start with one category and one valuation basis. A retail-value plan and a cost-value purchasing budget must not be mixed in the same calculation.
State the basis and the period
A retail-value plan uses expected selling values for stock and receipts. Shopify's open-to-buy guide describes the common planning formula: planned sales plus planned markdowns plus planned ending inventory, less beginning inventory. Existing purchase commitments must then be considered before approving more receipts.
Label the month, currency, category, and valuation basis at the top of the sheet. Keep forecasts visibly distinct from actual results.
Calculate a fictional receipts allowance
| Retail-value planning input | Illustrative amount |
|---|---|
| Planned sales | $2,400 |
| Planned markdowns | $200 |
| Target ending inventory | $4,500 |
| Beginning inventory | $5,000 |
The planned receipts allowance is $2,400 + $200 + $4,500 − $5,000 = $2,100 at retail value. If $600 of receipts for that period is already committed on the same basis, the uncommitted allowance is $1,500 at retail value.
These are invented teaching figures, not Rustic Jewel Co finances, inventory, or a recommendation for your business.
Do not treat retail dollars as cash available
The $1,500 result is not $1,500 available to pay a supplier. If the relevant merchandise has an assumed cost-to-retail ratio of 40%, a simplified cost equivalent would be $600. That ratio must come from the actual proposed buy, not a convenient default.
Freight, duties where applicable, payment timing, operating expenses, and available cash require separate review. Use an accountant or qualified adviser where the budget affects financial commitments. This example explains the mechanics, not what your business can afford.
Keep the category cap separate from the assortment
The pictured necklace has red and green options. An open-to-buy allowance does not tell you which color will sell, how many of each to buy, or whether a supplier can deliver them. Those decisions need variant-level evidence and current terms.
The reorder review guide addresses the quantity question. Do not use a remaining category budget as proof that a weak item deserves replenishment.
Revise the plan when facts change
Replace forecasts with actual sales and receipts as the period progresses. Record canceled or delayed commitments explicitly. If the calculation becomes negative, investigate the plan and existing orders rather than hiding the result or canceling commitments without checking the agreement.
For a proposed purchase, confirm exact options, quantities, and current terms through wholesale inquiries. A disciplined budget preserves a decision boundary; it does not create demand.