How to calculate turnover rent (with worked examples)
Turnover rent = base rent + (percentage rate × turnover above the breakpoint). Percentage rent only applies to sales above the breakpoint; below it, the tenant pays base rent only.
The breakpoint is usually the base rent divided by the percentage rate (the “natural” breakpoint).
Here’s the formula, the four steps, and two worked examples — one below the breakpoint and one above — so you can see exactly when percentage rent kicks in.
The four steps
- 1. Base rent — the fixed annual rent in the lease.
- 2. Percentage rate & breakpoint — the agreed rate (often 5–10%) and the turnover threshold. The natural breakpoint = base rent ÷ rate.
- 3. Percentage rent — if turnover is above the breakpoint: rate × (turnover − breakpoint). If not, it’s zero.
- 4. Total rent — base rent + percentage rent.
🧮 Example A — above the breakpoint
Base $100,000 · rate 8% · turnover $1,500,000.
| Natural breakpoint ($100,000 ÷ 8%) | $1,250,000 |
| Turnover above breakpoint | $250,000 |
| Percentage rent (8% × $250,000) | $20,000 |
| Total rent | $120,000 |
🧮 Example B — below the breakpoint
Same lease, but turnover is only $1,000,000.
| Natural breakpoint | $1,250,000 |
| Turnover above breakpoint | $0 |
| Percentage rent | $0 |
| Total rent | $100,000 |
Natural vs negotiated breakpoint
A natural breakpoint is base rent ÷ percentage — the point where percentage rent naturally begins. A negotiated (artificial) breakpoint is a figure the parties agree instead, higher or lower, to shift where the sharing starts. Always calculate against the breakpoint the lease actually specifies.
Why centres get this wrong by hand
The maths is simple; the inputs are the problem. If turnover is self-reported once a year, you’re calculating rent on a number you can’t verify — and reconciling it late. Collecting verified turnover monthly means the calculation is done continuously and there are no year-end disputes. That’s what Beeplee does automatically.