The quoted monthly rent in $AUD
After all costs including rent and owner salary
Total capital to open (fit-out, equipment, deposits)
5-year lease — full model
Click a card above to compare termsTotal rent commitment
$456,000
$7,600/mo × 60 mo
Total capital at risk
$606,000
fit-out + all rent
Fit-out payback
13 months
months to recover fit-out only
Exposure cover
51 months
months of net profit equal to fit-out + all rent (stress test)
Profit by end of term
$720,000
$12,000/mo × 60 mo
Return on commitment
119%
net profit ÷ total committed capital
Net loss if business closes at…
End of Year 1
$370,800
Net loss · Most common failure window
End of Year 2
$135,600
Net loss · After initial ramp-up phase
End of Year 3
+$99,600
In profit · Past typical survival threshold
Loss = fit-out sunk cost + remaining lease obligation − profit earned. Assumes no subletting income, no goodwill on sale. Conservative by design.
3-year vs 5-year — the actual trade-off
A 5-year term commits $182,400 more in rent than a 3-year term. At $12,000/mo net profit, you recover that extra commitment in 16 months.
5-year is worth it when: fit-out cost exceeds $91,200 (one year's rent), and net profit exceeds $7,600/mo. Otherwise, protect yourself with a 12-month break clause inside the 5-year term.
Negotiation note
A 5-year lease with a 12-month break clause is functionally a 1-year lease with 4 optional extension years. If trading assumptions prove wrong, you exit at month 12 with only $91,200 in remaining obligation (vs $364,800 without the clause). This framing typically works on landlords because their preferred outcome is a long-term tenant — the clause is an insurance premium, not a concession.
Why lease term matters
The monthly rent is not the decision. The total commitment is.
At $7,600/month, a 3-year lease commits $273,600 in rent. A 5-year lease commits $456,000. That $182,400 difference is invisible until you sign. This tool makes it visible before you do.
Total committed rent
Monthly rent × lease months. This is your minimum financial obligation from day one, before you serve a single customer. A longer term locks in more obligation even if trading is poor.
Fit-out payback
How many months of net profit it takes to recover your fit-out investment — before you start paying for the rent commitment. A heavy fit-out on a short term means you recover less value per dollar spent.
Full break-even
The month at which cumulative net profit equals fit-out cost plus total rent paid. If this falls inside the lease term, the deal is structurally sound. If it falls outside, you never recover all committed capital in this term.
Year 1 loss scenario
If trading is worse than modelled and the business closes at the 12-month mark, this is the net loss: sunk fit-out plus remaining lease obligation minus profit earned. The number most operators never calculate before signing.
Important. This tool uses linear profit projections. Real businesses have ramp-up periods, seasonal variation, and growth curves that this model does not capture. The loss scenarios assume no subletting income, no goodwill on sale of the business, and no landlord negotiation on early termination. These are intentionally conservative. Verify all figures with your accountant before signing any commercial lease.
Common questions
Lease term and break clauses, answered
Is a 3-year or a 5-year commercial lease better in Australia?
It depends on one number: how much you are spending on fit-out. A long lease is a bet that you will still want the site in year five. If your fit-out costs more than about a year of rent, you need the longer term to amortise it. If the fit-out is light and portable, the shorter term keeps your options open and costs you very little.
How do I know if the extra two years are worth committing to?
Compare the extra rent you are locking in against the profit you expect to make during those extra years. A 5-year term on $8,000/month commits an extra $192,000 over a 3-year term. If your monthly net profit is below the monthly rent, the longer term cannot pay for itself inside the extra period — which is the threshold this calculator shows you.
What is a break clause and should I ask for one?
A break clause lets you exit at a fixed point — commonly at 24 or 36 months — usually with notice and sometimes a penalty. Ask for one on every long lease. It converts a five-year commitment into a three-year commitment with an option, which is almost always what you actually want. Landlords resist it, but it is far more negotiable than the headline rent.
What happens if I have to walk away early without a break clause?
You generally remain liable for the remaining rent until the landlord re-lets the premises, and you may have given a personal guarantee or bank guarantee on top. This is the single largest hidden risk in a long lease, and it is why the remaining obligation is worth calculating before you sign rather than after.
Do longer leases get cheaper rent?
Often, yes — a landlord may offer a lower base rent, a rent-free fit-out period, or a contribution to works in exchange for a longer commitment. Price that incentive properly: a three-month rent-free period on a five-year term is worth far less than the flexibility you gave up if the site underperforms.
What about annual rent increases?
Most Australian commercial leases escalate 3–4% a year, or by CPI. Over five years that compounds meaningfully, so the final year can cost noticeably more than the first. Check whether the review is fixed, CPI-linked, or market-reviewed — market reviews carry the most risk to you.
Commitment looks workable? Verify the address next.
This calculator shows lease cost over time. A Locatalyze report shows whether the address can generate the revenue to justify it — with competitor data, demand signals and location score, data confidence, and proceed / verify / avoid screening recommendation.