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Okay, here's a classic situation:

The countryside is plagued by a dragon, who demands tribute from the local city on the basis of them being in his territory.

Now, the dragon here doesn't actually demand the humans to sacrifice virgin women, and if he did, it would be for an entirely different (but consensual) purpose (c'mon, how else am I supposed to place half-dragons into the world?).

So, the dragon demands food (whatever a normal human would eat) tribute to be brought to a certain spot every three days. His standards aren't high (a bit higher than that of an average peasant), but he gets slightly angry when the tribute is deliberately lacking or doesn't contain any fruit.

The dragon doesn't show it but in his heart, he's afraid of humans, more precisely an army of humans, so he would obviously play it safe by making his slaying more costly than paying the tribute.

With an aerosol aqua regia breath, he's quite formidable and if things go south (read an army shows up), he can fly away, but once he does that, returning would most likely result in his death.

Assuming an average late-medieval city, just how much and what should an average tribute be in this case?

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As other answers have stated, you need a reason (preferably more than one) why the dragon is tolerated, or your situation will not survive. Given that dragons in that time period are generally seen as raiding farms (disastrous to the peasants), hoarding treasure (sure to draw enterprising thieves), or even stealing away virgin princesses (sure to infuriate their families), that's a problem.

You're going to be requiring an active benefit to having a dragon around, and it needs to be a significant benefit; otherwise, even if the villagers are willing to bribe the dragon not to attack them, dragonslayers will gladly line up to take their shots at the dragon. You need to give the peasants a reason to actively try to keep away such problematic people.

Fear

This one I'm mostly outlining to point out the pitfalls. You might be able to threaten the village into compliance, but that doesn't stop those roaming dragonslayers from making their attempts. The dragon might threaten that such attempts would automatically be blamed on the village, but that would just have such slayers make sure to avoid the town; some might care about the consequences of failure, but others will not think that far ahead or just not care, and of course some will be so confident that they never consider such a silly possibility as getting killed.

Resources

Perhaps dragons are the only accessible source for (insert valuable thing here). If dragon scales are valuable, for instance, the dragon might offer up its loose scales as they fall out, giving the locals a convenient reason for a trade hub to develop. Sure, you could kill the dragon and get an immediate harvest, but that's dangerous, and it only works once: a continuous supply of scales is more profitable in the long term, especially since you avoid flooding the market and thus keep prices up. This proposition basically relies on having some rational long-term thinkers on both sides of the negotiating table; it can work, but if you don't have means to enforce it there will inevitably be some idiots trying to muck it all up.

If your world has magic, you can pretty much make up whatever you want here, and bonus points if it only works while the dragon is still alive. It makes for a lovely excuse as long as you can get your valuable magical ingredients without serious injury or death to the dragon; loose scales, a horn falling off, perhaps a few teeth or claw-tips, or even the waste it leaves behind!

Protection

This is likely your best bet. The dragon isn't going to want others spoiling his tidy little arrangement, not if he's got an easy time living off what the local peasants offer him. He's going to be defending that arrangement against unwanted interlopers of all sorts, whether they be dragonslayers or armies or other dragons; it makes a perfectly natural proposal, really.

This actually gives you something pretty close to standard feudalism: you're substituting a dragon for the knight/noble/king (depending on the size of the town), but the basic principle still holds up. The peasants feed the dragon (attendants/guards for the dragon optional) and keep aspiring dragonslayers away, and in return the dragon ensures the peasants can go about their lives in safety. There's lots of ways to go with feudal dragon-nobles like this: I can practically see a story writing itself as I type.

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    $\begingroup$ It may be worth looping around and noting that depending on how profitable the arrangement is, the limits of the locals’ generosity will also vary - potentially to the point where even the most gluttonous dragon wouldn’t be able to eat it all $\endgroup$
    – Pingcode
    Commented Jan 22, 2020 at 6:31
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Cost verses Return

When it becomes too expensive that the peasants can't afford to.

If it's good bountiful land, they can afford more. If the dragon keeps out other dragons from the area that might eat them, it's worth more. If the cost of a lord and his army is more than the dragon.

When the cost is too high, the peasants will either try and drive off or kill the dragon or leave themselves if they can't. If they can't do either then they must find a way to pay.

Protection money is always based on what the victim can afford to pay. If you charge too much you can end up with less.

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There just has to be a reason the people are tolerating an acid-breathing dragon roaming around. (and not threatening to burn the town, that would draw in the army!)

Tribute

According to research published by the Eastern Kentucky University, the average medieval peasant ate 3500-4000 calories a day, so the dragon would need about the same amount of calories (the equivalent of 42 apples).

Incentive

However, the people would probably be tired of having to feed this dragon all the time, and would soon call the army to drive it away. They need an incentive to keep the dragon there, and one is that the dragon helps protect the city from invaders, and guards traders from thieves along the road. Maybe make your city an important trading hub? If the dragon flew away, all of their goods could be stolen, so they want to keep it happy. If the dragon wants to pleasure itself with some human virgin, they would probably send it one to keep it happy, but the dragon could threaten to leave and be the guardian of a rival trading town.

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  • $\begingroup$ Not to mention the awesome tourist attraction... $\endgroup$
    – AlexP
    Commented Jan 21, 2020 at 23:04

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