Percentage rent clauses require retail tenants to pay additional rent once their sales exceed a "natural breakpoint." This calculator shows whether you owe percentage rent and how much.
Percentage Rent = (Gross Sales − Natural Breakpoint) × Overage Rate
The natural breakpoint is typically calculated as base rent ÷ percentage rent rate. If your lease specifies an artificial breakpoint, use that figure instead.
| Gross Annual Sales | $1,500,000/year |
| Annual Base Rent | $60,000/year |
| Percentage Rent Rate | 5% |
| Artificial Breakpoint | $0 (use natural breakpoint) |
Result
$15,000/year percentage rent — $75,000/year total rent
| Line Item | Value |
|---|---|
| Gross Annual Sales | $1,500,000 |
| Breakpoint (Natural) | $1,200,000 |
| Breakpoint Used | $1,200,000 |
| Sales Above Breakpoint | $300,000 |
| Percentage Rent | $15,000 |
| Base Rent | $60,000 |
| Total Annual Rent | $75,000 |
| Effective Rent Rate | 5.00% of gross sales |
Typically 5–8% for retail. Found in the percentage rent clause.
Leave 0 to use the natural breakpoint (base rent ÷ rate)
Result
No percentage rent owed — sales below breakpoint by $0
| Line Item | Value |
|---|---|
| Gross Annual Sales | $1,200,000 |
| Breakpoint (Natural)$60,000 ÷ 5% | $1,200,000 |
| Breakpoint Used | $1,200,000 |
| Sales Above BreakpointNo overage | $0 |
| Percentage Rent$0 × 5% | $0 |
| Base Rent | $60,000 |
| Total Annual RentBase + percentage | $60,000 |
| Effective Rent Rate | 5.00% of gross sales |
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The natural breakpoint is the sales volume at which a tenant's percentage rent would exactly equal their base rent. It's calculated as base rent ÷ percentage rate. For example, with $60,000/year base rent and a 5% percentage rate, the natural breakpoint is $1,200,000 in annual sales. Below this, no percentage rent is owed.
Percentage rent rates typically range from 5–8% of gross sales, depending on the retail category. Restaurants commonly see 5–6%, while specialty retail may see 6–8%. High-volume categories like grocery or electronics often negotiate lower rates (3–5%). The rate is always applied only to sales above the breakpoint.
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