It’s not easy to find the commission rate for sourcing agents online, trust me I searched through a lot of websites. I wanted to find clear information on how much sourcing agents get paid and any additional fees they charge. So I decided to email several agents based in China and provide the information myself.
Sourcing agents are paid by either a flat rate for each service performed or as a percentage of the order amount. The commission rate percentage is usually between 3% to 10% depending on the order amount and the number of orders made with the same agent.
Some agents will charge a combination of both a flat rate for specific services and a percentage of the order amount. It’s important to be aware of each cost and work with an agent who is transparent about all their fees.
To be clear and avoid any confusion, sourcing agents are often known by several names as they often perform different tasks, such as;
- Dropshipping agent
- Private agent
- Fulfillment agent
- Shipping agent
- Procurement agent
How Much Do Sourcing Agents Charge?
Every sourcing agent will have a different pricing structure and charge prices based on various factors. You can find agents on Fiverr, Upwork or Facebook who offer basic sourcing services only at very low costs or companies based in China that are all-in-one solutions for eCommerce businesses and offer a large range of services.
Below are screenshots of sourcing agent costs from Fiverr and Upwork. Obviously, the costs on these platforms will be much lower than you will find from companies based in China who offer premium services.
But you need to ask yourself if searching for the lowest possible cost is the best choice for your business. Can the agent be trusted? Can they provide you with everything you need? Is the person even based in China?
If the agent is simply heading to Alibaba to source products for your business, you are paying for something you can do yourself.
Private agents on Fiverr are charging as low as $10 to source suppliers and Upwork charge hourly rates for their sourcing services from $20 – $100 per hour.
When it comes to sourcing companies based in China, they usually work on a percentage of the order value instead of fixed pricing. The larger the order you make usually results in a smaller percentage you pay the agent.
The service charge range I have listed in the service charge column is the range of prices I received from the various sourcing agents I contacted. Each supplier sets out their pricing structure a little differently so be sure to check this prior to working with them.
|Order Amount (US$)
|8% – 15% (Some low orders have a fixed fee)
|$10,000 – $20,000
|5.5% – 10%
|$20,000 – $30,000
|5.5% – 7%
|$30,000 – $50,000
|4% – 6.5%
|$50,000 – $100,000
|3% – 5%
|3% – Negotiable
The table above is a broad view of the pricing structure for sourcing agents from the information I received. If you are unsure of a specific agent’s pricing, I suggest you make direct contact with them. Many agents work on a case-by-case basis and their fees will vary based on several factors.
Some agents will charge a starting fee which is usually between $200 and $500 and then a commission based on each order.
Other agents may have various priced service plans depending on your needs. You may receive basic services but additional services including warehousing, product photography and private labeling option may require you to pay for a higher tier plan which may cost an extra 1% – 5%.
Because your agent is essentially a middleman between you and your supplier, you may be paying your agent for your order instead of the actual supplier. This is usually done with an upfront payment of between 20% to 50% and the remainder once the order is complete.
Each agent provides multiple services within their plan and below are the kinds of services you can expect an agent to offer.
- Product sourcing
- Manufacturing and production solutions
- Import/Export compliance
- Consultation on compliance certifications
- Product design
- Package design
- Mould development
- Quality inspection
- Order consolidation & shipping
- Custom declaration
- Product lab testing arrangement
- Shipping arrangement
- Factory inspection
- Detail negotiation
- Marketing videography
- Samples collection & inspection
- Product photography
- Certification application
- Price & terms negotiation
- Order supervising
- Private label solutions
- Contract review
- Order follow-up
- Container loading supervision
Many of these services are free whilst working with an agent, whilst others will cost additional fees depending on the service. Not all agents will offer all of the above services.
One thing you will find with sourcing agents based in China is they value loyalty and business partnerships. Often agents reward repeat businesses with lower fees. For example, Ruizhi Sourcing takes 2% off their commission rate for clients on their fourth order of the same product.
Most costs in China are negotiable and even if this is not stated as part of their fees, many agents will negotiate pricing terms with clients they have built long-term partnerships with.
The majority of sourcing agents are reasonably flexible when it comes to how they get paid. The agents often have several options including wire transfer and PayPal but it’s best to inquire with them first to ensure you chose the method with the lowest transfer fee.
My Related Articles:
- How to find dropshipping agents in China
- Chinese Dropshipping agents – What you need to know
- 23 questions to ask Alibaba suppliers
Should You Choose a Sourcing Agent with the Lowest Price?
If you want to choose a sourcing agent with the lowest possible price you will often be working with an individual instead of a company. The problem with this is your entire business is reliant on a single person.
If the agent is unavailable for whatever reason, your business goes on hold until they decide to get back to you. In addition, do you trust paying a single agent with a large sum of money? There is no barrier to entry and anybody can claim to be a sourcing agent, therefore there is a level of risk involved.
Let’s say you do decide to work with a company instead of an individual, and you find the cheapest company. You want to order $8,000 worth of stock for your first order and the company only charges a 5% service fee whilst the others were 8% and above.
However, the company you are paying 5% may also be receiving 5% from the supplier on their end. Instead of sourcing you the supplier with the best prices and highest quality materials, they engaged a supplier willing to pay them an added percentage on top. This is not an unusual practice in China.
Reputable agents who have a reputation to uphold will not do this. It’s always important to ask your agent if you will have a direct line of communication with the supplier they source. If an agent won’t give you this line of communication, it’s likely they don’t want you to find out they are also being paid by the supplier.
Should You Choose a Sourcing Agent with Higher Fees?
When selecting an agent to work with, you are essentially deciding on a business partner. It’s a huge decision. The agent is responsible for such a large part of your business and they can often make or break it!
Simply opting for an agent with a lower cost is not usually a smart business decision. In fact, choosing a more costly agent who is suitable for your business needs may actually make you more money in the long term.
To decide whether the extra agent fees are of value for your business, consider what a more costly agent can provide:
- Pre-existing working relationships with suppliers to leverage higher quality products at lower costs.
- Access to premium shipping lines for faster and more reliable shipping options.
- A larger company makes scaling your business viable during peak periods.
- Access to improved packaging and branding options.
- App integration for order fulfillment instead of uploading orders on a spreadsheet via CSV.
- Responsibility for returns and refunds for defective items.
These benefits enable you to charge higher prices for your products and will provide a better customer experience which increases repeat business and larger profits. So you need to ask yourself whether paying for a reputable sourcing company is worth it for you.
This is a broad generalization and a higher agent cost does not imply the agent will be any better. It means lower prices should not be your priority and you need to find the right balance of an agent who meets your business requirements at a reasonable cost.
A large expense in the early stages is ordering samples. You may need to order samples from multiple suppliers and at various stages throughout the process. Working with an agent based in China can save you money during this period as, for example, you can have all samples sent domestically to your agent who can then ship them in a single package directly to you.
If you are considering purchasing in bulk for your Shopify or Amazon FBA business, my advice would be to seriously consider working with a private agent. It may seem like an unnecessary expense to pay an additional middleman 5% of your order value, although it may be the best decision you make.
Agents have already developed solid partnerships with manufacturers and can usually source products for lower prices than you can find on Alibaba. The amount of services and resources an agent can provide your business is amazing value.