Active margin coastlines are distinguished by rock erosion that acts in two different directions: waves erode the coast horizontally or landwards, a process that creates sea cliffs; and rivers and streams erode the landscape vertically via channel incision. The relative rates of each process exert a dominant control on coastline morphology. Using a model of river channel incision and sea-cliff retreat, we explore how terrestrial and marine erosion compete to shape coastal topography, and specifically what conditions encourage the development of coastal knickpoints (i.e., a river or stream channels that end at a raised sea-cliff edge). We then compare results to actual landscapes. Model results and observations show that coastal knickpoint development is strongly dependent on drainage basin area, where knickpoints typically occur in drainage basins smaller than 5 × 10⁵–6 × 10⁶ m², as well as channel geometry and sea-cliff retreat rate. In our study area, coastal knickpoints with persistent flow (waterfalls) are uncommon and form only within a small morphological window when 1) drainage basin area is large enough to sustain steady stream discharge, but not large enough to out-compete sea-cliff formation, 2) sea-cliff retreat is rapid, and 3) channel concavity is low so that channel slopes at the coast are high. This particular geomorphic combination can sustain sea-cliff formation even when streams tap into larger drainage basins with greater discharge and more stream power, and provides an initial explanation of why persistent coastal waterfalls are, along many coastlines, relatively rare features.