The formula may be trying to say that adding each spell slot costs that much more. For a first level ring:
1st spell slot: 1000 gp.
2nd spell slot: 1750 gp
Each additional spell slot: 1500 gp
So a two-spell ring costs 2750, three costs 4250, four 5750. For level-two rings, this progression is 11,000 - 17,000 - 23,000; somewhat more reasonable for LOTS more spell slots.
This would make Fazul's ring cost 250, 687.5, 1062.5, with 375 gp for each additional slot. This seems rather expensive for level-0 spells, but for higher-level spells, extra spell slots are exponentially more useful.