We had a similar discovery with American Airlines, where we had award travel in business (UIO to MAD), and it cost over $600 for my daughter's lap ticket. When I talked to American about it, the agent told me that the 10% (plus around $300 in taxes) was based on the lowest business class fare currently available, and recommended that I pay right away to avoid having to pay 10% of a higher business class fare on day of travel.

Not sure what the deal is with CO, but for a recent flight on COPA, they charge 10% of the lowest fare currently available (e.g., the fare that I bought my ticket under). I would pester CO some more to see if you can't get a lower fare.