What does Revenue Spent on Rent mean?

This metric helps you figure out how much of your company’s revenue to spend on rent for a workspace.

How it's calculated

This metric takes the expense(s) you designated as rent in the forecast, divides that total by your revenue, and expresses it as a percentage.

What's better?

It depends

What it means

This metric helps you figure out how much of your company’s revenue to spend on rent for a workspace. Aiming for a lower percentage may make it easier for your business to absorb fluctuating costs in other areas such as inventory and personnel. But a low percentage doesn’t always mean you’re paying lower rent. A more expensive property can still have a low rent-to-revenue ratio, if its location results in more revenue for the business. For example, a storefront in a more expensive location may bring in more customer traffic and, consequently, more revenue.

Keep in mind that the percentage of revenue companies spend on rent varies a great deal by industry and region. So, for this benchmark, it’s best to compare your company to those in the same industry and region.

 

(Source: LivePlan.com)