chapter  8
13 Pages

Fees and charges

Fees and charges are payments made to service providers for ser­ vices rendered. The term fee is usually used to mean a payment that covers the full cost of the service provided. It is the market price of a professional’s service - the doctor’s fee, an architect’s fee, school fees. In a profit-making enterprise like a private health clinic, this will include an element of profit, a return on the capital invested. If the organization is a non-profit charity, like a private school, the fees will merely cover the cost of the service minus any income the school will receive from other sources. Public sector pricing raises more complex issues, but it too is based on the idea that the price is fixed at least to cover the marginal social cost of producing the service.