In a percentage lease, the tenant pays a base monthly rent, which is typically lower than the rent for a traditional lease. In addition, the tenant agrees to pay a specified percentage of their gross sales that exceed a pre-determined breakpoint. The breakpoint is a sales threshold above which the percentage rent kicks in. For example, if the base rent is $2,000 per month and the agreed percentage is 5%, with a breakpoint of $50,000, the tenant will pay 5% of any sales over $50,000 in addition to the base rent.