It might help to put some numbers to this.
Imagine there are five entrants in a particular grade; they all pay £50 so the fund stands at £250. You pay out to 5th place, so for example the winner might get 90 quid, the second 70, third 50 - his or her money back - fourth 30 and fifth place a tenner.
Or you could pay out 70, 60, 50, 40 and 30 if you wanted less difference between places.
Now if ten folk took part in that grade, the payouts would be doubled.
Youve got a fixed number of winners (5) and a variable number of losers. It needs a good number of losers to hike the prize money.