Hi, I need your advice!
can anyone help me to find out how much should an apparel/accesorize agent charge?
is it a fixed % ? is it a fixed fee?
will they get paid once buyer releases payment to supplier or before? will they get paid all in once or in two parts?
what happens if the agent manages to get the supplier an order and then suppliers screws and the order fails? will the agent still get paid?
i appreciate your thoughts and knowledge on this very important matter!
Usually an agent charges an agreed commission (around 10%-15% of total sales) to the designer. For higher commissions designers will expect from the agents more effort when pushing their products to stockists. This will also impact designer's wholesale price and therefore your own interest: so you need to find a balance.
Commonly a sales agent gets paid in full after the designer has been paid by its stockist (perhaps 7 days after).
A broker should also be responsible of getting the invoices paid.
The sales agent intermediate the liasons of the commercial agreement between the stockist and designers. He or she gets only paid if transaction succeed.
Remember that not only designers screw orders, stockists go bankrupt too (and now more than ever!).
Consider also the way of doing business in your area.
You are right on other issue but agent fee is not fixed like 10-15%, Its depand on you, that how can you meet your target.
Hi Rod! Thanks for your advice.
I've been told an agent usually charges a maximum of 5% on invoice FOB, and yes, they get paid once the payment had been released from buyer and vendor had received the money.
Also, should an agent always charge the same % or should he or she negotiate it each time a transaction is being done?
Are an NDA and a contract enough legal documents to avoid buyers and vendors to screw the intermediate agent? I understand many will try to get rid of the intermediate person in order to reduce price or maximize the benefit.
I agree with peculiar in that you can charge more or less commission , because at the end of the day everything is negotiable when talking business in a free market economy! You just need to find a balance whilst considering final retail pricings that benefit both the buyer and designer. ;) Protip: 10-15% is a useful guide for British fashion designers to calculate their pricings (what that could mean to you Natalia when dealing with London designers? ;)
If you mean different transaction with same designers, I don't see a problem having a fixed rate. But designers could be surprised if you charged them 15% when dealing with "X", and just 3% when dealing with "Y". "Why", they could ask, "if you were giving exactly the same sales and marketing representation for both buyers?" But then again you could contract with them to reward you with a better commission by performance like goal sales or you were just prospecting them in "major leagues" (i.e. "I'd charge you 15% if I managed to sit your design next to Alexander McQueen in Harrods this A/W 11").
Since you are the middleman (middlewoman) and businesses are tough (specially during economic downturns), it could be potentially attractive to some big buyers to cut you even though you'd a good lawyer or all your legal documents to support you...But you'll always have this threat so don't worry just be prepared having all your legal documents signed, screen both parties for business and credit references and find other practical ways to reduce the impact of this threat in your business. For instance, loads of designers that have their own website have their sales rep contact details on them, not theirs. Or you could also add value to your job and offer them press or marketing services for a monthly retainer. Also, from a practical point of view, some buyers prefer to deal with a sales minded folks rather than a creative ones when doing business (the sales agents are the "normal" representation model in the UK within the luxury fashion industry); moreover, you could give your designers a range of buyers to do business with so if they fail you, they risk to loose the access to your market expertise, sales potential, marketing representation or added value services you may offer them (like chasing the invoice!); and the same risk goes for voracious buyers looking for new and fresh designers to change their visual merchandisings up to 5 times or per year! So loosing your business and knowledge about what's IN and what's NOT should discourage them to mess with you. The more dependent are both parties to you, the less likely they will cut you.
Well, those were other two cents! Any buyer/designer here care to share their experience when dealing with designers/buyers through a middleman or woman? C'mon, share your cents! ;)
Hi Rod! always so useful and clear! thanks!!!
at the moment i'm working with a fixed % on invoice FOB, but I know for example that working with high street fashion brands for their basic garment productions means that i cannot charge a high commission because price is already very tight, so i find myself in the situation of asking for a lower % for these type of orders, but i understand it's confusing...
I understand your point regarding the model (more commission for better results) and i will work on it, it's a good point!
about the legal documents, i have them signed and in them it says with which buyers i will be pitching for the designers but sometimes i get a new good contact asking me for sourcing and it's annoying to be changing the legal documents each time, that's why i end up working without updating them, what do you think? is it risky?
Thanks again!!!!!! ;)))
Well, you were worried about the other parties to break the rules of the game, and you are the first one to break them! But I think this is because the contract wording. Is it possible to broaden your definitions in your contract terms and conditions (geographical delimitations vs buyers listings) so you don't have to change your documents every time?
Anyway, I agree that you need to legal cover your business but not to an extent where you are limiting yourself from doing business...otherwise your biggest threat to your business health becomes your own legal strategy! So yeah, it's risky but not in the sense of your question! It's like wearing an armour to swim in the pool to cover yourself from getting hit by other swimmers.
I think so. Thank you.
no more than 20%