According to China’s laws and regulations, resource compensation fee on iron ore is charged by crude ore, but the price market of China’s iron ore is not mature. This paper uses mining cost and processing cost to determine the rational price of crude iron ore, and analyzes its factors, clarifies the influence of crude iron ore grade to price. Based on Chinese iron ore producers cases, a pricing model is set up from a relation of crude ore grade and price, which can be used to calculate the pricing rate of iron ore with variable grades. For a simplified process, a suggestion is presented that the compensation fee can be charged by iron ore grade interval.