Reference no: EM132364375

You are starting a new business, and you want to open an office in a local mall. You have been offered two alternative rental arrangements. You can pay the landlord 10% of your sales revenue, or you can pay a fixed fee of $1,000 per month. Describe the circumstances in which each of these arrangements would be your preferred choice.

Paying $1000.00 per month is actually fairly reasonable depending on the success of the business, to achieve the expense or liability cost of the office space. So that can benefit the business if it doesn't really well on a monthly basis. Also, if you pay the landlord 10% of your sales you could be paying more or less depending on your sales that month (if you agree upon monthly sales revenue). You're safe either way, it might be better to take the 1000.00 deal depending on sales and depending on the type of business.