This chapter provides a discussion of the key features of cost accounting for user fees in a local government context with simplified examples of the calculations that are required. It discusses some of the additional considerations concerning user fees for public services and provides two cases of user fee problems to discuss some of the difficulties and ethical issues that surround cost accounting for the different types of user fees. The cost accounting process for user fees is often more complicated and involves more allocations than cost accounting for grants or other purposes because the costs must be allocated out to different customer classes. Since the 1970s, local governments in the United States have relied more upon user fees to finance public services. Determining costs for a utility is only one of the steps to setting reasonable user fees.