I do not use gradings as a means of monetary income for my studio; there is no fee for a grading. My kendo studio is independent, so I will not ask a fee of my students.
I use the gradings to allow the student to do all of the curriculum for his/her grade under a microscope and then use it as an opportunity to give them more detailed feedback. It also is good for them to have to perform under some pressure.
I call it a grading rather than a test because, really, I'm not testing them. They don't 'grade' unless they are ready, at which point, it no longer can really be called a test.
Also, it allows other students to see what is expected of senior students at higher grades.
Since kendo doesn't use belts, there is no incentive to 'get a new belt.' My students train more like the football team: I run them through a training regimen and repetitive drills and as they get better, they get to learn more advanced techniques.
Since everyone looks the same with regards to display of rank (none), the only way to see what 'rank' someone holds is to see how they perform.