Calculate percentage rent, break point sales, or natural breakpoint from total sales, base rent, and sales percentage for the selected period.

Use sales, breakpoint and rent for the same period. This model calculates additional rent above a breakpoint; the lease defines eligible sales and other terms.

Percentage Rent Formula

The following formula calculates additional percentage rent above the breakpoint. Sales, breakpoint and rent must use the same period. The lease defines which sales count. The natural breakpoint is base rent divided by the percentage rate as a decimal; a negotiated breakpoint may differ.

Rsales = max(TS - BPS, 0) × POS / 100
  • Where Rsales is the Percentage Rent ($)
    • This is the additional rent owed on top of base rent
  • TS is the total sales ($) 
  • BPS is the break point sales ($) 
  • POS is the percentage of sales (%) 

How to Calculate Percentage Rent?

The following example problems outline how to calculate Percentage Rent.

Example Problem #1

  1. First, determine the total sales ($). In this example, the total sales ($) is given as 500000.
  2. Next, determine the break point sales ($). For this problem, the break point sales ($) is given as  250000.
  3. Next, determine the percentage of sales (%). In this case, the percentage of sales (%) is found to be 5.
  4. Finally, calculate the Percentage Rent using the formula above: 

Rsales = max(TS – BPS, 0) * POS/100

Inserting the values from above yields: 

Rsales = (500000 – 250000) * 5/100 = 12,500 ($)

Example Problem #2

The variables needed for this problem are provided below:

total sales ($) = 600000

break point sales ($) = 300000

percentage of sales (%) = 7

Entering these values and solving gives:

Rsales = (600,000 – 300,000) * 7/100 = 21,000 ($)