What a China Sourcing Agent Actually Costs (With the Arithmetic)

Every sourcing agent will tell you they are transparent. The arithmetic is where the truth is, and it takes about two minutes to run.

Here are the three models in use, priced against a real order: 400 diamond core drills, factory ex-works value USD 20,000.

Model 1 — stated commission on the factory invoice

You see the factory’s own quotation. The agent adds a stated percentage. On this order at 5 percent:

You know what the factory is being paid. You know what the agent is being paid. If you later want to renegotiate with the factory directly, you have the number to negotiate from.

Model 2 — stated commission, higher rate

Same structure at 10 percent: 22,000 before freight. Whether that extra 1,000 is worth paying depends entirely on what the agent does for it. Some do pre-shipment inspection, factory audits, drawings review and consolidation in-house. Some forward your enquiry to a trading company and add a margin for the forwarding.

Ask what the 10 percent buys that the 5 percent does not. If the answer is vague, the 5 percent answer was probably available.

Model 3 — no stated commission

This is the one that costs the most. The agent quotes you 23,000 for the same goods, tells you there is no commission because they “get a factory discount”, and keeps the difference. On this order the difference is 3,000 — a 15 percent markup buried inside a price you were told was factory-direct.

You cannot detect model 3 from a single quote. You can detect it by asking three questions in writing:

1. Can I see the factory’s own quotation, with its letterhead? A closing agent cannot show it, because there is no gap to hide.
2. Which factory is running the order? Not “a partner factory in Zhejiang” — a name and an address.
3. What is your commission, as a percentage of the factory invoice? If the answer is a number, you can check it. If the answer is “we don’t charge commission, we work on factory pricing”, you are in model 3.

The small-order problem

A 5 percent commission on a 3,000 order is 150. No agent can audit three factories, collect comparable quotes, inspect, and consolidate for 150. This is why many agents set a minimum fee — commonly 300 to 500 per order — or decline small orders entirely.

There is nothing dishonest about a minimum fee, provided it is stated before you commit. What is dishonest is silently converting a small order into model 3 so the economics work.

What is not in the commission

Worth separating clearly, because bundles are where quotes become incomparable:

• Inspection — third-party inspection typically runs 100–300 per man-day depending on location and scope. Some agents include a basic visual check in the commission and charge separately for dimensional and hardness testing.
• Consolidation — receiving, labelling, palletising and photographing goods from multiple factories is real work with real warehouse cost.
• Freight — always at cost, and always quotable by you independently. If your agent will not tell you the forwarder’s name, that is a markup indicator.
• Bank charges and currency — on a 20,000 order, wire fees and FX spread can be 100–250. Ask who absorbs it.

The incentive question

A commission agent earns more when your order is larger. That is an incentive to sell you more, not necessarily the right thing. A markup agent earns more when the gap between factory price and your price is wider, which is an incentive to keep you away from the factory.

The only structural protection is visibility: the factory quote, the factory name, and the commission rate, all in writing before the deposit. Everything else is trust with extra steps.

Related reading

• Alibaba or a sourcing agent
• how to read a diamond tool quotation
• Incoterms for small importers

Want a quote structured this way — factory invoice, stated commission, costs at cost? Send the specification and we will show you the arithmetic before you commit.