Occupancy Cost Ratio Calculator
Benchmark your business performance. Calculate what percentage of your gross revenue is spent on rent and outgoings.
Revenue & Rent Details
What is a good Occupancy Cost Ratio?
The Occupancy Cost Ratio (OCR) is the percentage of your gross annual revenue spent on rent and outgoings. It is the single most important metric for determining the sustainability of your business location.
Industry Benchmarks in Australia
- Retail/Fashion: 12% – 20%
- Cafes & Restaurants: 8% – 15%
- Medical/Dental: 5% – 10%
- Distressed Level: 25%+
Tips for Tenants
If your OCR is climbing above 15-20%, you may need to renegotiate your lease at renewal, increase your average transaction value, or look for a building with lower outgoings.
* Note: "Occupancy cost" should include all recoverable outgoings and promotional levies in shopping centres.
To calculate the total rent and outgoings that make up your occupancy costs, use our dedicated Commercial Rent Calculator Australia.
Working out your occupancy cost ratio
The occupancy cost ratio compares what a business pays to occupy its premises with what it sells there. Add the year's base rent to outgoings (council rates, insurance, cleaning, shopping centre marketing levies and any other recoverable costs), then divide by gross sales.
Landlords, especially in shopping centres, watch this number when they set rents and decide on renewals. For a tenant it's an early warning: if rent rises faster than sales, the ratio climbs even when the business looks busy.
Worked example: a café turning over $720,000
A café pays $78,000 a year in base rent and $14,000 in outgoings, and takes $720,000 in sales.
- Base rent
- $78,000
- Outgoings
- $14,000
- Total occupancy cost
- $92,000
- ÷ sales of $720,000
- 12.8%
- If sales fall 20%
- 16.0%
- Occupancy cost ratio
- 12.8% (moderate)
At 12.8% the café sits inside the usual 8–15% range for food businesses. A 20% drop in sales with the same rent pushes it to 16.0%, which is why it's worth checking the ratio before agreeing to a rent review, not after.
Common mistakes
Leaving out outgoings
Rent alone understates the ratio. Include every recoverable outgoing and any marketing or promotion levy.
Using sales including GST
Compare like with like: use sales and costs both excluding GST, or both including it.
Judging on one strong month
Use a full year of sales. Seasonal businesses can look healthy in their peak months and stretched the rest of the year.
Ignoring turnover rent
If your lease has a turnover clause, add the percentage rent you pay above the threshold to the occupancy cost.