Common in retail and shopping-center leases — once a tenant’s sales exceed an agreed breakpoint, the landlord shares in a percentage of everything above it.
How it works
Sales above the breakpoint, multiplied by the percentage rent rate, gives the percentage rent owed. Adding that to the base rent gives the total rent for the period.
What this does not include
This computes a natural (unadjusted) breakpoint scenario — some leases use an “artificial” breakpoint set independently of the base rent, and reporting and audit rights around sales figures add complexity beyond the pure math shown here.
How to use this calculator
- Enter annual sales, the sales breakpoint, the percentage rate, and the base rent.
A worked example
Annual sales $800,000, sales breakpoint $600,000, 6% percentage rate, $48,000 base rent: percentage rent = (800,000−600,000) × 0.06 = $12,000, total rent = $60,000.
Annual sales $500,000, below the $600,000 breakpoint: percentage rent = $0, total rent = just the $48,000 base.
What the variables mean
| Variable | Meaning |
|---|---|
| Annual sales | Tenant’s total sales for the year |
| Sales breakpoint | Sales threshold above which percentage rent kicks in |
| Percentage rate | Rate applied to sales above the breakpoint |
| Base rent | Fixed minimum rent, paid regardless of sales |
Edge cases worth knowing
Sales below the breakpoint trigger no additional rent at all — the tenant only pays base rent in that case, common in retail leases where the landlord shares in upside above a negotiated threshold.
A negative sales breakpoint has no meaning, so the calculator declines to show a result for that input.
Frequently asked questions
What is a “natural breakpoint”?
The sales level at which base rent equals the percentage rate applied to sales — set as base rent divided by the percentage rate, so no percentage rent is owed until sales cross that mathematically implied point.
Who verifies a tenant’s reported sales?
Landlords typically retain audit rights to review a tenant’s sales records, since percentage rent depends entirely on self-reported sales figures.
Is percentage rent common outside retail?
It’s most common in retail and restaurant leases where sales volume is a meaningful, trackable figure — it’s rarely used in office or industrial leases.
