The three structures
Commission on the factory invoice. You see the factory's price, you pay the factory, and the agent invoices a stated percentage separately. The number is checkable because you are holding both documents.
Retainer plus commission. A monthly fee buys capacity, with a smaller percentage on top. This suits buyers with continuous volume and is poor value for occasional orders.
Markup inside the unit price. A trading company quotes you one number and keeps the difference between that and what the factory charged. You never see the factory price, so the margin is unknowable by design.
Why the structure beats the percentage
A stated commission and a hidden markup are not comparable even at the same headline rate, because a markup inflates the declared value of the goods. Import duty is charged on that value, so the margin is taxed as though it were part of the product.
The other cost of a bundled price is that you lose the ability to negotiate the part that is actually negotiable. If you cannot see the factory price, you cannot tell whether the saving came out of the factory or out of you.
What to ask before you sign
Is your fee charged on the factory's invoice, or built into the price you quote me? Will you name the factory? Who pays the factory, and into whose account? What is the fee if I reorder the same part next quarter?
An agent who will not answer the first two is being paid in a way they would rather you did not price.
What we charge
We tell you our fee upfront, on the quote, before you approve anything: a percentage of the order, invoiced separately from the goods. Quotes are free.
We do not hold your money and we do not touch the factory's price, which is the point: a price we never handle is a price we cannot pad.
Related questions
[01]Do sourcing agents in China charge a percentage or a flat fee?
Most charge a percentage commission on the order value; some larger agencies add a monthly retainer, and trading companies take their margin inside the unit price instead of charging a fee at all. Ask which of the three you are being quoted, because the percentages are not comparable across structures.
[02]Should I pay the factory directly or pay the agent?
Paying the factory directly keeps the invoice you declare to customs equal to the price you actually paid, and keeps the agent's fee visible and separate. It also means the agent is not holding your money.
[03]Is a sourcing agent cheaper than buying on a marketplace?
It depends on whether the marketplace listing is a factory or a reseller, and on how much your own time is worth. A marketplace listing price usually already contains a margin; whether an agent is cheaper comes down to whether they get you to the manufacturer and whether their fee is visible.
Read next
- How do you tell a Chinese factory from a trading company?The checks that actually separate a manufacturer from a reseller — business licence scope, address, export documents — and the badges that prove nothing.
- DDP, FOB or EXW: which should you buy on when importing from China?What each Incoterm actually covers, where the surprise costs sit, and the question that decides whether a DDP quote is real.