Are Finder's Fees Ethical?

By: Arment Dietrich | January 10, 2007 |

A question raised in a Yahoo group to which I belong begs the question, “are finder’s fees ethical?”

If a colleague refers business to you because they couldn’t take the business or it didn’t fit within their niche, should you pay them a finder’s fee?

If you refer business to a colleague because it doesn’t fit within your niche, do you deserve a finder’s fee?

What if you’re working with a partner company on a new business pitch and you win the business. Does the company that brought the partners together deserve a finder’s fee?

If you believe fees are ethical, how are the finders compensated? How does the business owner pay the finder? Is it added to the client’s budget?

We believe it’s unethical to ask for a finder’s fee. We work with freelancers, other PR firms, and partner agencies in business every day. We all refer business back and forth and not one of us asks for a fee.

We once had a partner agency ask us to add 25 percent of our fees to our invoices and pay them that as the fee. So not only did they want an exorbitant amount of money, they wanted us to bill the client for it. We no longer work with that agency.

Some people believe it’s the cost of doing business and it saves you from going out and finding the business yourself, therefore worth the fee.

We’d love your comments.