Variable rate structure is an engineering framework for determining the appropriate charge per mile of traveled by motorized vehicle users. The structure utilizes a bottom-up microscopic approach to calculate economically efficient rates that are tailored for individual vehicles specific to their route, time, and distance.

In addition, the variable rate structure is designed to produce a stable source of revenue to support the much needed transportation projects and to convey a clear message to road users about the consequences of driving, in hope of positively influence their choices.

The charge structure consists of four cost models corresponding to four major social cost components: road damage, accident risk, congestion, and environmental pollution. In each cost model, vehicle characteristics are converted into equivalent damaging units. Next, the values of marginal cost are determined per vehicle damaging unit-mile. Thus, the charge amount for a journey can be found by multiplying the marginal cost with each vehicle's total damaging units and miles of traveled.

Since the variable rate structure is a charging mechanism of the mileage-based user fee system, a section of this research is dedicated to justifying the needs and validating the benefits of this pricing instrument. Mileage-based pricing proves to be much more efficient and equitable than any other existing instruments, due to its ability to capture myriad impacts that vehicles have on the society and the environment.