What are the fair commissions for domain transactions? – Domain name thread
I think it’s 10%-20% depending on the type of sale.
You are delighted to receive an email indicating that you have sold a domain. Then your next thought is how you will only get 80% of the sale price.
There has been a lot of talk about domain transaction fees since GoDaddy announced the acquisition of Dan.com. GoDaddy charges significantly higher commissions than Dan.com, and customers fear that these fees will increase in the future.
With that in mind, here is my take on commissions.
Landing Page Sales
Domainers believe that the added value of sales platforms is minimal when a sale occurs on a landing page. The domainer actually brought the buyer. With a buy it now transaction, all the secondary market has to do is process a payment.
But there is more than that. I’ll give two recent Dan.com transactions as examples.
One was a $1,000 .gg sale. The customer paid immediately but took over a month to transfer the domain, requiring Dan.com to make repeated reminders. The other is one for just $1,500, in which the buyer doesn’t pay. Dan.com contacted the person three times (including several phone calls) to try to close the deal, all for a commission of $135. And it will be $0 commission if the deal does not close.
Add to that payment processing fees and the risk of fraud, and margins soar pretty quickly. I think one ten% commission on buy-it-now lander sales is fair.
There is another type of landing page sale. These are the ones with a negotiation, like a lander to make an offer. When the domainer does the negotiation, I think 10% is always fair. If the market is trading, then something like 15%-20% logic. Remember that the market has to deal with many trades that never end.
If someone lands on a marketplace website, finds a domain, and buys it, the marketplace deserves a big discount. People sometimes complain that Sedo takes a 15% share of a market transaction “because all they had to do was take the payment and process the transfer.”
No, they did a lot more. They have built a two-sided market, which is a lot of work. Exhibit A: All those startups that tried to replicate Sedo that failed. You need to bring buyers and sellers to a market.
Sure, now these sales don’t require a lot of extra work, but marketplace creators deserve rewards.
I think 15% is reasonable for a market like this.
Some branded markets charge more but also do more. BrandBucket and Squadhelp (premium listings) create logos and advertise domains to specifications, and bring buyers to the table. I don’t know if that justifies their commission rates, but they do something extra to earn a bigger discount.
Distributed Ad Services
Afternic and Sedo offer syndication services for your domains with registrars and other partners. This is extremely advantageous for domain sellers – it puts your domains in front of domain buyers at the exact moment they are looking for a name (or your name in particular).
It also reduces friction as buyers can purchase the domains as a new registration, getting the domain into their account within minutes.
Currently, Afternic charges 20% on sales under $5,000, 15% on the amount between $25,000, and 10% on the amount above those sales. Sedo charges a flat commission of 20%.
Is it worth it? I think so. First, like marketplace sales, these platforms have had to grapple with recruiting partners, building and managing technology, and so on. Second, they must share this commission with their partners.
And this scope? There’s no way an individual domainer can reproduce it.
I think Afternic’s declining commissions on this type of sale are fair.
Are current commissions fair?
To sum up, I would say that most commission rates today are fair.
I only question Buy Now landing pages or landing pages where the domain investor handles the negotiation. I think GoDaddy should lower the commission on these to around 10%.
Even with the purchase of Dan.com, there are competitors who will undermine this and keep the pressure on. Sav.com only charges 4% and Squadhelp (non-premium) is only 7.5%.