Treated industrial wastewater from different industries can be used for non-potable applications while also reducing conventional water pressures. In recent studies, the penalty for the concentration fluctuation in the centralised reused water system has not been studied. This paper introduces the concentration fluctuation penalty model to identify the effects of penalty on the centralised system’s profit using the mathematical modelling method. The General Algebraic Modeling System (GAMS) software is used to solve the nonlinear programming (NLP) model. The penalty is charged based on the treatment cost if the wastewater concentration from the supplier side suddenly exceeds the baseline concentration without prior notice as it would affect the total operating and treatment costs, thereby threatening the profit of the centralised system. Based on the results of the case study, as the wastewater concentration increases, the treatment cost also increases. The profit percentage changes showed that the centralised system could recover the costs by applying the penalty. Without penalty, the centralised system’s profit faced losses of more than 15 % in some cases compared to the baseline profit. As a result, it is possible to conclude that penalty is necessary to ensure the participating plants take the responsibility for sudden fluctuations and that the centralised system remains profitable throughout the year.