An agency fee is the payment made to an agent for services performed on behalf of a principal.

Simple Meaning:

It is the commission or charge paid to an agent for their work.

Examples:

Commission paid to a sales agent

Fee paid to a real estate agent

Charges paid to a travel agent

Nature:

It is usually based on a percentage of sales or a fixed amount.

It is treated as an expense in the accounts of the principal.

In short, an agency fee is the amount paid to an agent for representing or acting on behalf of another party.