What are fair commissions for domain transactions?
I think it’s 10%-20% depending on the type of sale.
You’re excited to get an email saying you sold a domain. Then your next thought is about how you’ll only get 80% of the selling price.
There’s been a lot of talk about domain transaction commissions since GoDaddy announced it is acquiring Dan.com. GoDaddy charges considerably higher commissions than Dan.com’s, and customers are concerned that these fees will increase in the future.
With this in mind, here’s my take on commissions.
Landing page sales
Domainers think the value-add of sales platforms is minimal when a sale takes place on a landing page. The domainer effectively brought the buyer. With a buy now transaction, all the aftermarket has to do is process a payment.
But there’s more to it than this. 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 isn’t paying. Dan.com has reached out to the person three times (including several phone calls) to try to close the deal, all for a $135 commission. And it will be a $0 commission if the transaction doesn’t close.
Add to this the payment processing fees and the risk of fraud, and the margins get eaten up fairly quickly. I think a 10% commission on buy now lander sales is fair.
There’s another type of landing page sale. These are the ones with a negotiation, such as a make offer lander. When the domainer does the negotiation, I think 10% is still fair. If the marketplace negotiates, then something more like 15%-20% makes sense. Remember that the marketplace has to handle lots of negotiations that never close.
If someone lands on a marketplace website, finds a domain, and buys it, the marketplace deserves a big cut. People sometimes complain about Sedo taking a 15% cut of a marketplace transaction “because all they had to do was take the payment and process the transfer.”
No, they did a lot more. They built a two-sided marketplace, which is a lot of work. Exhibit A: all those startups that tried to replicate Sedo that failed. You have to bring both buyers and sellers to a marketplace.
Sure, now those sales don’t require much incremental work, but creators of marketplaces deserve rewards.
I think 15% is reasonable for a marketplace like this.
Some brandable marketplaces charge more but also do more. BrandBucket and Squadhelp (premium listings) create logos and advertise the domains on spec, and bring buyers to the table. I don’t know if this justifies their commission rates, but they are doing something extra to deserve a bigger cut.
Distributed listings services
Afternic and Sedo offer services that syndicate your domains to registrars and other partners. This is hugely beneficial to domain sellers — it gets your domains in front of domain buyers at the exact moment they are searching for a name (or your name specifically).
It also reduces friction because buyers can purchase the domains just like a new registration, getting the domain in their account within minutes.
Currently, Afternic charges 20% on sales below $5,000, 15% of the amount between that and $25,000, and 10% of the amount above that on these sales. Sedo charges a flat 20% commission.
Is it worth it? I think so. First, as with marketplace sales, these platforms had to put in the work of getting partners on board, creating and managing the tech, etc. Second, they have to split this commission with their partners.
And that reach? There’s no way an individual domainer could replicate it.
I think Afternic’s sliding-scale commissions on this type of sale are fair.
Are current commissions fair?
To summarize, I’d say 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 about 10%.
Even with the Dan.com purchase, there are competitors out there that will undercut this and keep up the pressure. Sav.com charges only 4% and Squadhelp (non-premium) is just 7.5%.
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