In Morbi, an agent is paid in one of two ways: by the factory, usually as a share of the order value, or by you, as a fee. The choice decides whose interests the agent serves. An agent paid by the factory has a reason to steer you towards that factory, while an agent paid by you has a reason to find the right one.
We do not quote rates. They vary and are negotiated. This article explains the models and the questions to ask.
How does a factory-paid agent work?
The factory agrees to pay the agent a percentage of each order it brings. The buyer sees a normal price and does not see the payment, because it is built into the price list. This is common in tile trading, and many agents and brokers work this way.
It is legal, and it can work well if the agent is honest and the factory is good. The problem is the incentive. The agent earns when you place an order, whatever the quality, and may earn more from factories that pay higher rates. Nobody is paid to say no.
How does an agent paid by the buyer work?
Here the buyer pays the agent directly, for example a fee per order, a retainer or a fixed fee for a project. An agent paid by you for tiles can recommend the best factory, reject a lot and walk away, because the agent's pay does not depend on the factory. See agent paid by you versus paid by the factory for the comparison.
The cost is visible to you, which some buyers dislike. But it is easier to see what you are paying for, and to compare. Fee structures are explained in fixed fee versus percentage of order and retainers and per-container fees.
How can you tell who is paying your agent?
Ask directly, and ask in writing. Useful questions are:
- Do you receive any payment, discount, rebate or gift from any factory, now or later?
- Will you put that in the agreement, with a right for me to end it if it is untrue?
- Can I pay the factory directly, with your fee invoiced separately?
- Will you name every factory you propose, with its address?
What conflicts of interest should you watch for?
The worst case is double payment: the agent charges you a fee and also takes money from the factory. Your agent then has an incentive to recommend that factory whatever the quality. Another sign is an agent who insists that money flow through the agent's account.
Our guide checking your agent takes nothing from factories shows how to test this, and paying the factory directly or via the agent covers the payment route. We work for you, not the factory: one written fee, agreed in advance, and nothing from the factory.
Which model should you choose?
If you buy once and know the factory, a factory-paid agent may be enough, as long as you check quality yourself. If you want independent audits, rejection of poor lots and honest advice on which factory to use, an agent paid by you is the cleaner option.
Whichever you choose, get the arrangement in writing. A sourcing agent contract should say who pays, how much, and what the agent promises to do.
Next step
If you want an agent with no interest in which factory you pick, book a free sourcing review. Our approach is described on the services page.