As a small business owner, you understand the importance of getting the right products at the right prices. After all, every cent counts, and you don’t want to lose a single penny to suppliers. Moreover, sourcing agents are experienced and can source high-quality products easier.
Sourcing agents have many more responsibilities as they can help with product inspections and handle payments and shipping. However, the main issue is how much they cost and if you can afford their services in the first place.
If you are considering hiring a sourcing agent, here are factors that contribute to the price of their services.
What to Consider When Hiring a Sourcing Agent
Every China sourcing agency has its way of breaking down the charges. Costs depend on the services provided and the specific agent you settle on.
However, some factors help gauge the costs of hiring a sourcing agent, including:
- Agent’s Experience
If you expect to receive high-quality work, the agent’s experience matters a lot. Moreover, providing a cost-effective approach for a company means the sourcing agent should be well-rounded.
Therefore, expect to pay much more if the agent handles the following for you:
- Finding the best factories
- Price negotiation
- Gathering samples
- Product customization
- Employing product inspection services
- Shipping products
However, keep in mind that a purchase manager cannot handle all the following tasks perfectly. They have expertise in one or two of these skills. Still, they can offer expert advice in other sectors of production.
- The Workload and Contract Agreement
The company size and effort to source products determine how much you should dedicate to hiring a sourcing agency. Moreover, employing a full-time purchasing manager means you don’t get quality for your money.
Purchasing agencies split duties and tasks, meaning you get more output. Besides, sourcing agents get paid after completing the work you give them. When you agree on a specific fee on the contract, the sourcing agency handles all tasks, including training staff.
Pricing Policies for China Sourcing Agencies
While costs may differ from one sourcing agency to another, basic policies guide operations in China.
Fixed Fee
In China, some agencies offer fixed fees, meaning they decide on a fixed monthly or weekly fee for each project. Therefore, the agency introduces you to a supplier, and the business relationship continues.
The downside is that you may land an inexperienced agency, leaving you with a low-quality supplier. The best way to approach a fixed fee agreement is to agree on a monthly fee. Usually, inexperienced agencies will stay away from longer-term agreements. It will cost you more, but it’s safer, and the company gets more services like supplier communication and project management.
Commission or Percentage Service Fee
Most agencies prefer to take this route. They charge buyers a commission based on the total order cost. Here, expect to pay between 5% to 10%. However, sourcing fees may go lower if you have a bigger order. For example. Some sourcing agencies agree to a 3% commission.
Unfortunately, low commission and service fees translate to low-quality services. Always check the agency’s profile for costs.
The question on sourcing agent costs is difficult to answer because it depends. A sourcing agency charges differently depending on output quality and experience in the industry. Therefore, consider all factors before agreeing to anything.
