Two agents quote you differently: one charges 6% of order value, the other says there is no commission, they will simply give you a price. The second sounds better right up to the moment you ask what they live on. This article is for companies importing from China at container volume who are choosing who to work with, and it breaks down the three ways an intermediary gets paid — and what each one does to their behaviour inside your negotiation.
Three models, and what they do to the agent's incentives
1. Percentage of order value. The most common structure: usually 3–10%, most often 5–7%, depending on product complexity and how much handling is involved. You see the factory price and the fee as separate lines.
The strength is transparency: you hold the factory invoice and can check it. The weakness is a built-in conflict — on paper the agent earns more when you pay more. In practice it is offset by the fact that agents live on repeat orders rather than single ones, but it is worth understanding.
2. Flat fee. A project fee or a monthly retainer for running procurement. The incentive here is clean: the fee does not move with the price of the goods, so the agent can push for the lowest one without an internal conflict.
The catch is the threshold. A flat fee makes sense on a steady order flow; on a one-off shipment it can cost more than a percentage would. This is the model for companies effectively outsourcing a purchasing department.
3. Hidden markup (resale). The agent buys in their own name and sells to you at their price. There is formally "no commission". You see one number and never the factory's.
This can be a perfectly honest business model — it is exactly how any trading company works. The problem is not the markup itself but that you cannot size it: you do not know whether it is 4% or 30%, and you have no way to find out. You also lose the direct contract with the manufacturer, and the direct warranty that comes with it. How to tell the two apart: factory or trader.
"We don't charge commission" never means you are not paying. It means you do not know how much.
The fourth, hybrid model
In practice the combination usually works best: a flat fee for the search and verification stage plus a percentage on shipment. The flat fee covers work that may never turn into an order — factory vetting, audits, samples — while the percentage ties the agent to the outcome.
It is also the honest answer to "what if you find nothing". Search and verification are real work with a real cost, and they are only free when they are not actually being done.
The question that gets asked far too rarely
Do you receive any payment from the factory?
This matters more than the size of the fee. An agent taking a percentage from you and a "thank you" from the supplier is not working for you — they are working for whichever supplier pays more. That is where strange recommendations, reluctance to look at alternative plants, and sudden loyalty to one manufacturer all come from.
Ask it directly, get the answer in writing, and put it in the agreement. An agent who deflects has already answered.
Which model fits which buyer
- One-off or trial purchase — percentage. You pay for a result, take on no fixed cost, and can verify the factory price.
- Steady flow, one or two containers a month — hybrid, or percentage at a volume-reduced rate.
- Continuous purchasing as part of operations — flat fee or retainer: cheaper across turnover and it removes the pricing conflict entirely.
- Small consolidated buys across many factories — often resale, and that is reasonable: administering fifteen small suppliers costs more than a separately invoiced fee is worth. But you should know that is what it is.
- Complex technical product or own design — a flat fee for the engineering plus a percentage: product development and tooling is project work, not order handling.
What the fee covers, and what it does not
This is the second-biggest source of misunderstanding. Normally included:
- Supplier search and initial shortlisting
- Verification of legal status and manufacturing capability
- Negotiation, collecting and comparing quotations
- Order management, communication with the plant, schedule control
- Basic shipment coordination
Normally invoiced separately:
- On-site inspection and quality control — per visit or per man-day
- Lab testing and certification
- Sample production and courier costs
- Tooling and moulds
- Freight, insurance and customs clearance
- Warehousing and repacking
Ask for that split in writing before you start. "All inclusive" with no list is either an agent who does not know their own cost base, or an invoice you have not seen yet.
How to compare two offers properly
Comparing percentages against each other is meaningless — compare the delivered cost. Build the full landed cost under each option: factory price, fee, inspections, freight, duty, taxes. The method is in landed cost of importing from China.
It regularly turns out that the agent charging 7% delivers a lower final number than the "commission-free" one, because they reach the factory at a different price. That comparison is the subject of sourcing agent vs buying direct on Alibaba.
Red flags in the terms
- Refusing to show the factory invoice under a percentage model — one model is stated, another is running
- Payment only to personal accounts or in crypto — see supplier scam signals
- Refusing to name the factory before signing — verification becomes impossible by design
- No agreement defining scope of work — and therefore nothing to claim against
- Fee charged on a total that includes freight and duty — you are paying a percentage on pass-through costs
- A single "partner" factory for every category — a marker of supplier-side compensation
How we do it
We show the factory price and our fee as separate lines — no markup buried in the unit price. You can ask for the factory price on your product and see exactly what you are paying and what for. Inspections, certification, tooling and logistics are itemised rather than dissolved into a unit rate. Seven years, 340+ verified suppliers, 3,500+ deliveries; projects in our case studies.
See supplier search, supplier verification and full-cycle sourcing vs logistics, or write to contact@silkwaysourcing.com or WhatsApp +380 97 883 4765 and we will quote the factory price and the fee on your product separately.
