DEFINITION of 'Sliding Scale Fees'

A type of tax or cost that may change according to an associated factor. A sliding scale is designed to capture value according to the movement of an underlying variable - most commonly income - so that those with a higher value pay more. This type of pricing has the effect of spreading out the consumption of goods and services, although it may reduce consumption for the wealthy.

BREAKING DOWN 'Sliding Scale Fees'

Sliding scales fees are used to require those who have the ability to pay more to actually pay more. For example, a hospital may not charge a poor or uninsured patient the market value of the medicine that he receives for an ailment, but may charge a wealthy or insured patient the market value. Companies and organizations may make up for a revenue short fall from providing below-market price services to the less fortunate through grant funding or donations.

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