After hearing that Gary Barlow will be paid close to £2m for the new series, the Destiny's Child singer wants her £500,000 salary tripled, The Sun reports.
"Kelly wants the gig but she's a big star and should be paid accordingly," a source said. "She was a popular judge last year - the producers and Simon have said as much.
"Simon has even said he wants her back on several occasions, including in The Sun this week. If they want to make her a serious offer then they will have to do just that - make her a serious offer."
However, producers are said to be considering withdrawing their offer and axing Rowland from the panel before the filmed auditions start on May 15 in Cardiff.
A Syco source added: "Yes, we would love to see Kelly back as she was good and people liked her. But we are never held to ransom over these things. We never negotiate a deal based on what another member of the show is getting as that would be ludicrous.
"There is not a truckload of money sitting here to just hand out to people. Whatever we pay is a good salary and something they would struggle to get on any other TV show."
The X Factor insider added that producers expect the fourth judge to be confirmed at the last minute, as has been the case in previous years.
Barlow, Louis Walsh and Tulisa Contostavlos will all return to judge The X Factor this year.
Watch Gary Barlow discuss his desire to return to The X Factor earlier this year below: