pass-through costs
Definition
Pass-through costs are expenses that one party pays upfront on behalf of another party and then bills to that other party at the exact same amount, without any markup or profit added. These costs simply "pass through" the hands of the person billing you, meaning they are not paying for those expenses out of their own pocket. Common examples include government filing fees, shipping charges, or third-party vendor invoices that your contractor or service provider pays first and then charges back to you.
Example
Your lawyer files paperwork with the state and pays a $200 filing fee, then adds that exact $200 to your invoice as a pass-through cost because it was your expense, not theirs.
Watch Out
Always ask for receipts or documentation for pass-through costs because you want to confirm you are being charged the actual amount paid and not a marked-up version.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.