Basically, an agent does exactly the same thing that we as authors do.
They send out our manuscript with a cover letter to a potential publisher. If the publisher offers a contract, the agent negotiates the contract (with your input of course). And if the contract is signed, the agent handles the royalties and money.
Right now the standard in the industry is for the agent to earn 15% of the money from the contract she negotiated.
If an agent responds to your submission (or contacts you initially) and requires a reading fee to read your manuscript or other type of fee, BEWARE!!!! That is technically against the “rules” they’re supposed to follow.
I submitted to an agent once and they sent me back a letter saying they loved my manuscript but required a reading fee first to officially comment on it. Red flags went up and when I reported their name to the market guide where I found their listing, they said that was wrong and that they were reporting them and removing them from their listing.
The only fees an agent charges is office supplies. But in today’s technology where e-mail is free and long-distance phone plans exist, my agent has never charged me a penny for office supplies. When I get paid by a publisher she negotiated a contract for, she gets paid. 15%. It’s how agents earn their money.