Percentage Rent Calculator
What a retail tenant owes on sales above the breakpoint — with the breakpoint derived the way the lease actually intends. Free, no signup, calculates as you type.
The suite
Net rent. Not the gross, and not with NNN added.
Shown so the tool can price the gross-rent mistake. Never in the breakpoint.
The percentage rent clause
Of sales above the breakpoint. Retail is typically 4% to 8%.
Breakpoint
Derived: base rent ÷ rate.
Percentage rent owed
$18,400
Over the breakpointSales of $1,800,000 against a $1,493,333.33 breakpoint. The tenant pays the rate on the $306,666.67 of excess, on top of base rent.
- Natural breakpoint (derived)
- $1,493,333.33
- Annual base rent
- $89,600
- Base + percentage rent
- $108,000
- Effective rent
- $33.75/SF
- Occupancy cost (with NNN)
- 7.96%
What using gross rent would cost
Built off base rent, the breakpoint is $1,493,333.33 and the clause pays $18,400. Add the NNN reimbursements in by mistake and it becomes $2,080,000.00, which these sales never reach — so the landlord collects $0. The reimbursements are not rent for this purpose.
The mistake that turns $18,400 into nothing
A natural breakpoint is base rent divided by the percentage rate. The word that does the work there is base.
On a triple net lease the tenant also reimburses the landlord for taxes, insurance and common area maintenance. Those reimbursements arrive in the same cheque as the rent, they sit on the same line of the rent roll, and they are not rent for this purpose — they are the tenant funding the building’s operating costs. Fold them into the breakpoint and you raise the bar the tenant has to clear before the landlord participates at all.
On the suite below that single error moves the breakpoint from $1,493,333.33 to $2,080,000. The store does $1.8M. It clears the first number comfortably and never reaches the second, so a clause worth $18,400 a year quietly pays nothing — and it does not look like a bug, because a zero here is a perfectly ordinary outcome.
This is not a stylistic preference. It is the behaviour DealWise’s own engine was corrected to, after the error was measured on live leases.
What this calculator includes
Both breakpoint types
Natural, derived from base rent and the rate, or an artificial one stated in the lease.
The gross-rent mistake, priced
See what the same clause pays if NNN is wrongly folded into the breakpoint.
Base plus percentage
Total rent for the year, and the effective rate per square foot it works out to.
Occupancy cost
Total occupancy cost as a share of sales — the ratio a retailer actually manages to.
Zero is explained
Sales under the breakpoint owe nothing, and the tool says so instead of printing a bare $0.
The same engine as the product
Calls the code that underwrites a real retail deal, so the two cannot drift apart.
Example: a 3,200 SF store doing $1.8M
Sample inputs
- Square feet
- 3,200
- Base rent
- $28.00/SF NNN
- NNN reimbursements
- $11.00/SF
- Percentage rate
- 6%
- Annual gross sales
- $1,800,000
Base rent is $89,600 a year. At 6%, the natural breakpoint is $89,600 ÷ 0.06 = $1,493,333.33 — the sales level at which a straight 6% of sales would exactly equal the base rent.
Sales of $1,800,000 clear it by $306,666.67, and 6% of that excess is $18,400. Total rent for the year is $108,000, or $33.75/SF against a $28.00 face rate.
Now the check worth memorising. $1,800,000 × 6% = $108,000 — exactly the total rent. That is not a coincidence, it is what a natural breakpoint is: once sales clear it, base rent plus percentage rent collapses to a straight percentage of sales. If your two numbers do not tie like that, the breakpoint is wrong.
Natural, stated, and what the difference costs
An artificial breakpoint is simply a dollar figure the lease names, used as-is. It is almost always negotiated above the natural one, which delays the point at which the landlord starts participating — a concession, and one that is easy to grant because it costs nothing unless the store does well.
| Breakpoint | How it is set | Where it lands | Percentage rent on $1.8M |
|---|---|---|---|
| Natural | Base rent ÷ rate | $1,493,333.33 | $18,400 |
| Stated, above natural | Written into the lease | $1,600,000 | $12,000 |
| Natural, built off GROSS rent | The common error | $2,080,000 | $0 |
The middle row is a negotiation: the tenant bought $6,400 a year of relief, and both sides knew it. The bottom row is an accident, and it is worth more than the concession anybody negotiated.
Where percentage rent goes wrong in underwriting
It is treated as reliable income. Percentage rent is the most volatile line on a retail rent roll — it is a function of somebody else’s sales. A buyer capitalising last year’s percentage rent at the same rate as contractual base rent is paying a contractual multiple for a variable stream.
The sales figures are stale, or absent. Reporting obligations are routinely missed and just as routinely not enforced. If a rent roll shows percentage rent, the question is which sales year produced it, and whether the landlord has the right to audit.
The breakpoint is not re-derived after a rent step. A natural breakpoint moves every time base rent does — a lease stepping from $28.00 to $29.50/SF moves the breakpoint from $1,493,333.33 to $1,573,333.33. Models that compute the breakpoint once at year one overstate percentage rent for the rest of the term.
Exclusions are ignored. Percentage rent is owed on gross sales as the lease defines them, which is rarely what the point-of-sale system reports. Returns, sales tax and inter-store transfers usually come out. Whether online orders count is now the most contested clause in the section, and it can move the number materially.
DealWise reads the clause out of the lease itself — the rate, the breakpoint type, the stated amount — rather than asking you to retype it, and re-derives a natural breakpoint at every rent step. The rent roll stays the system of record.
Frequently asked questions
What is percentage rent?
Additional rent a retail tenant pays on gross sales above an agreed level, called the breakpoint, on top of base rent. It ties the landlord's income to how the store actually trades: a strong location shares its upside, a weak one costs the landlord nothing extra.
What is a natural breakpoint?
The sales level at which percentage rent would exactly equal the base rent — base rent divided by the percentage rate. A suite paying $89,600 of base rent under a 6% clause has a natural breakpoint of $1,493,333.33. It is derived from the lease, not negotiated, which is why it is called natural.
How do you calculate percentage rent?
Subtract the breakpoint from annual gross sales, and multiply what is left by the percentage rate. On $1,800,000 of sales against a $1,493,333.33 breakpoint at 6%, the excess is $306,666.67 and the percentage rent is $18,400 for the year.
Is the breakpoint based on base rent or gross rent?
Base rent. This is the single most expensive mistake in the clause. NNN reimbursements are the tenant paying the building's operating costs, not rent, so including them inflates the breakpoint. On the example, adding $35,200 of reimbursements moves the breakpoint from $1,493,333.33 to $2,080,000 — which $1.8M of sales never reaches — and the landlord collects $0 instead of $18,400.
What is the difference between a natural and an artificial breakpoint?
A natural breakpoint is derived from the base rent and the rate. An artificial breakpoint is a dollar figure written into the lease and used as-is, whatever the arithmetic would say. Artificial breakpoints are usually negotiated above the natural one, which delays when percentage rent starts and is a concession to the tenant.
What is a typical percentage rent rate?
Most retail clauses fall between 4% and 8% of gross sales, varying by category — high-margin, low-volume businesses like jewelry sit at the top of that range, and grocery and other high-volume, thin-margin uses sit well below it, sometimes at 1% or 2%.
What counts as gross sales?
Whatever the lease says, and the exclusions are where the money is. A well-drafted clause excludes returns and refunds, sales tax, employee discounts, gift-card sales until redeemed, and inter-store transfers. Online orders are the live fight: whether a sale fulfilled from the store, or ordered online and collected in it, counts toward the breakpoint is now a routine negotiation rather than boilerplate.
Do I owe percentage rent if sales are below the breakpoint?
No, and that is the clause working as designed rather than a missing figure. Below the breakpoint the tenant pays base rent only. The landlord's participation begins at the breakpoint and applies solely to the excess above it, never to the first dollar of sales.
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Every term, grouped by the question it answers.
The clause is in the lease. You should not have to retype it.
DealWise AI reads your retail leases, pulls the percentage rent rate and breakpoint out of each one, and re-derives the natural breakpoint at every rent step — so the sales upside in your model matches the contracts it came from.