A fee is a price that you charge for a specific service. It’s what you earn when you work as a freelancer, consultant, or contractor.
Fees are used to refer to payments given to professionals who provide services. It’s commonly used for so-called liberal professions such as artists, consultants, and lawyers or for some positions, such as being on the board in an organization.
Unlike salaries, fees are paid over a short period or to cover specific work that you perform.
Who receives fees?
A fee is compensation for specific, often project-based, work. When you undertake the work, you have what we call financial responsibility and you must use your own resources to complete the work.
You have to cover costs that you incur during the work, and you should consider this when you price your services. You should work out your cost price—what it costs you to provide the service—so that you can charge the right fee.
Other types of fees
Transactional fee
These are the ones we’ve covered so far. When you charge an individual or a business for performing a service, this is a transactional fee. Other types of transactional fees include mortgage fees and banking fees.
Late payment fee
When you’ve invoiced a client and they don’t pay on time, you can charge late payment fees, usually a percentage of the invoice amount. You should include information about late payment fees in your contracts or your invoices.
Hidden fee
Hidden fees are extra charges tacked onto your bill. Usually, companies include information about these in the fine print. You see these types of fees from banks, phone companies, internet providers and so on.
Additional fee
If you’ve accepted a job, but the buyer keeps adding to the project or you have to shoulder costs on behalf of the buyer, you can charge additional fees. You should have some information about additional fees in your contract.