Sourcing agents in India are paid either by the buyer, through a fee, or by the factory, through a share of the price. Within buyer-side fees there are four common models: fixed fees, a percentage of order value, retainers and per-container fees.
Who pays is the first question to ask. How the fee is calculated comes second, though it still shapes behaviour.
Paid by the factory
Here the agent introduces you to a supplier and the supplier pays the agent, usually as a share of each order. The price you see already includes that payment. Some agents disclose it. Many do not.
This model looks free to you, but it ties the agent's income to the factory. The effects on supplier choice, inspection and claims are set out in an agent paid by you or by the factory.
Some agents charge both sides: a fee from you and a payment from the factory. Ask directly, and get the answer in the contract.
Paid by the buyer
When you pay the agent, the fee usually takes one of these forms. Many agents combine two of them.
- A fixed fee for a defined piece of work, such as a supplier search, a factory audit or a pre-shipment inspection.
- A percentage of the order value, charged on each order the agent manages.
- A monthly or annual retainer for ongoing work across many orders.
- A per-container or per-shipment fee for order follow-up, inspection and loading.
How each model shapes behaviour
A percentage of order value rewards bigger orders and higher prices, which is a mild conflict when the agent negotiates price for you. A fixed fee is neutral on price, but it must define the scope clearly. Retainers suit steady, repeat buying. Per-container fees suit buyers whose volume varies. The trade-offs are covered in fixed fee vs percentage of order and retainers and per-container fees.
Questions to ask any agent
- Who pays you on this work: me, the factory, or both?
- How is your fee calculated, and what exactly does it cover?
- Does your fee change if the order value or the price changes?
- Is the no-payments rule written into the contract?
- What happens to the fee if the first shortlist does not produce a supplier?
Costs that sit outside the fee
Laboratory tests, couriers, travel and independent inspections are usually extra. Ask whether they are billed at cost with receipts or with a mark-up. A clean arrangement passes them through at cost, with the original receipt.
Next step
We agree one written fee before we start, quoted per engagement, and we take nothing from factories. Third-party costs are passed on at cost with receipts. To get a quote for your product, book a free sourcing review.