Legal Definitions - pass-through

PASS-THROUGH

Pass-through refers to the costs that a seller or lessor charges to the buyer or lessee. These costs are also known as pass-along costs.

• A landlord may pass-through the cost of utilities, such as water and electricity, to their tenants.
• A manufacturer may pass-through the cost of raw materials to their customers.

These examples illustrate how pass-through costs are added to the final price of a product or service. The landlord and manufacturer are not absorbing the costs themselves, but instead, they are passing them on to their customers. This can affect the overall cost of the product or service and may impact the buyer's decision to purchase.