Some scenarios and strategies under GoDaddy’s new commission model
The new 15/25 commission structure changes the calculus.
GoDaddy announced its new commission structure today, and it looks very different than what I expected.
Ever since GoDaddy announced the acquisition of Dan, I assumed commissions at Dan would increase. But I didn’t expect Afternic to introduce a carrot and stick system: increasing its standard commission (the stick) but providing an option to get a lower commission than before (the carrot).
If you aren’t aware of the details, check out my earlier post. But at a high level: Afternic commissions are 25%, but if you park your domains on a GoDaddy-owned platform, then they are 15%. The commission on those platforms is also 15%.
Previously, a $5,000 sale at Afternic carried a 20% commission, or $1,000. A $5,000 sale at Dan carried a 9% commission, or $450. Now, if a domain is parked at Dan and sells on Afternic or Dan, the commission is $750. But if you choose to park that domain elsewhere and it sells on Afternic, the commission is $1,250.
Only one of the numbers in that scenario is a winner compared to the old model: if the domain is parked at Dan and sells on Afternic.
But that may be a common scenario for many domainers. Let’s say you sold 20 domains last year at $5,000 each. They were all parked at Dan and 25% of them sold there, with the rest selling at Afternic. Here’s how your commissions would add up:
Dan: ($5,000 x 15%) x 5= $3,750 commissions
Afternic: ($5,000 x 15%) x 15= $11,250 commissions
Total commissions: $15,000
This same ratio in the old model would be:
Dan: ($5,000 x 9%) x 5= $2,250 commissions
Afternic: ($5,000 x 20%) x 15= $15,000 commissions
Total commissions: $17,250
The “break-even” in this scenario is just under 50% of your sales happening at Afternic and half at Dan.
It gets more complicated for sales above $5,000. Afternic previously had a graduated scale:
20% commission on the amount up to $5,000
15% on the amount from $5,000-$25,000
10% on the amount above that
Frankly, most people never gave Afternic credit for this scale and just said its commission was 20%. So I’m not surprised they got rid of it. But it makes a big difference on bigger-ticket sales.
For example, a $25,000 sale on the old model was really a 16% commission. A $50,000 sale was 13%.
I don’t know many people who have lots of big-ticket sales like this through Afternic. It might be worth parking them with an alternative service like Sav, Squadhelp or Efty and raising the asking price at Afternic to compensate.
It’s worth noting that Sedo has a similar carrot in its commission structure, but only for sales on its main marketplace.
This brings up a strategic point. If you prefer not to point your domains to GoDaddy brands, it makes sense to go ahead and list your domains at both Sedo and Afternic. Some registrars rotate between the two of them, and Namecheap gives a preference to Sedo. So if you list with Sedo and Afternic and someone buys the domain at Namecheap, you’ll pay Sedo’s 20% commission instead of Afternic’s 25%. Of course, if you park the domain with GoDaddy, then you’re better off leaving your domain off of Sedo.
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