For most buyers a fixed fee is the cleaner choice, because the agent earns the same whether the price goes up or down. A percentage of order value can work, but it gives the agent a small reason to favour bigger orders and higher prices.
Neither model protects you on its own. The scope, the reporting and the ban on factory payments matter more than the formula.
How a fixed fee works
You and the agent agree a fee for a defined piece of work: a supplier search, an audit, an order from contract to loading. The fee is known before work starts.
- It is neutral on price, so the agent has nothing to lose by pushing the factory down.
- It is easy to budget, because it does not move with the order value.
- It needs a clear scope, so both sides know what counts as extra work.
- It can feel high on a small order, because the work does not shrink with the order value.
How a percentage works
The agent charges a share of each order's value. The fee grows with volume and price.
- It scales with your business, so small trial orders cost less in absolute terms.
- It ties the agent's income to the price, which is a conflict when they negotiate that price for you.
- It can become expensive on high-value, low-effort repeat orders.
- It is harder to compare, because the real cost depends on future prices.
Watch the scope, not just the formula
A fixed fee with a vague scope can turn into a series of extra charges. A percentage with a clear scope can be fair and simple. Before you sign, list the stages the fee covers: supplier search, audits, samples, specification, production follow-up, inspection, loading, documents and claims.
Then agree what happens when work goes beyond that list, such as a second shortlist or an extra audit. Write it down in the agreement, so neither side has to guess.
Which one to choose
Choose a fixed fee when you want clean incentives on price and a clearly defined job, such as a supplier search or a first order. A percentage may suit steady repeat orders where the work per order is stable. Some buyers use both: a fixed fee for sourcing, then a retainer or per-container fee for ongoing orders.
Whatever the formula, check three things. The fee is in writing. The agent takes nothing from the factory. Third-party costs are billed at cost with receipts. For the wider picture, read what a sourcing agent in India costs.
Next step
We agree one written fee per engagement before we begin, so our income does not rise with your price. To get a quote for your product, book a free sourcing review.