Finder’s Fee

What Is A Finder’s Fee?

A finder’s fee (also known as “referral income” or “referral fee”) is a commission paid to an intermediary or the facilitator of a transaction. The finder’s fee is rewarded because the intermediary discovered the deal and brought it to the attention of interested parties. The presumption is that the parties would never have found the deal without the intermediary, and the facilitator thus warrants compensation. This term is relatively vague and transcends industry lines, making it a universally known concept from specialty to specialty.

Deeper Definition

A finder’s fee is a reward and thus a form of incentive to keep business contacts and resources communicating the needs of a company or organization to potential clientele or partners. While contracts are not required in such arrangements, structuring and agreeing to terms for finder’s fees can keep all parties in agreement on the scope of compensation that will be paid. This may be especially useful for contacts who repeatedly attract business to the company.

Depending on the circumstance in which the deal is established or completed, the finder’s fee can be paid by either the transaction’s buyer or seller. The finder’s fee is often given as a gift from one party to the individual or agency responsible for helping the first party find the match they’re looking for. This is done without any legal or contractual obligation. Neither the buyer nor the seller is bound by any law to give whatsoever amount to who referred the buyer to the seller.

Some applications or companies attach the finder’s fee to as many transactions made or referrals. They state that there’s a particular amount of reward to each person as long as they invite users to use their application.

Finder’s Fee Example

Henry works as a content creator for an online agricultural firm. The firm is into a whole lot, and they decided to go pro by allowing investors who are ready to invest and get their ROI with main money for a particular period. Henry was told that like many people he refers to the investment plan, there’s a finder’s fee attached depending on the amount invested by the investor.