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Updated on April 6, 2024 , 1862 views

Defining Fee

A fee is regarded as the fixed priced charged in return of providing specific services. Fees can be applied in a gamut of methods, like penalties, commissions, charges, and costs.


Most commonly, fees are found in heavily transactional services and are generally paid in the form of salary or wage.

How Does a Fee Work?

Most often, fees are linked with transactional relationships, especially to the professionals who offer services. In certain cases, a fee can be charged when a person hires a business to complete certain tasks, such as filing Taxes, cleaning a house, driving a car, etc.

This fee type is generally the most transactional and transparent as it signifies payment for one single reason for which the fee-charging business got hired. Some of the transactional fee examples include fees for transacting money or fees for the mortgage.

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Types of Fees

Businesses and individuals pay fees for a wide variety of reasons. An individual might pay a fee to a financial advisor for helping select and Handle investments. Or, a family might pay a fee to a broker while buying a Real Estate property.

In the same way, a business might pay a certain amount in the form of a fee to an Accountant to manage books, financial reports, filing taxes, creating balance sheets, and more.

As far as charging fees is concerned, governments might charge it for providing a business license or a passport to an individual. Investment institutes may charge a fee for maintaining accounts every quarter. The examples here are endless.

Example of a Fee

Let’s take a fee example here. Suppose a guest house is charging travellers Rs. 500 per night. However, if you find and compare deals, you may find another inexpensive guest house providing a room at the cost of Rs. 300 per night.

But there could be an Rs. 200 resort fees during the time of booking or later than that. If this inexpensive guest house didn’t communicate this charge while providing you with the room, this is the example of a hidden fee.

Certain guest houses justify such hidden fee for amenities, like Wi-Fi, food, and more. Despite the cost of both the guest houses being the same at the end of the day, Rs. 200 for additional amenities may seem attractive to some people, and they would not find a problem paying the same; thus, compelling guest houses not to disclose everything at the time of booking.

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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