Efty founder brings up an important topic for Domain Investors – Sales Commission

Sales Commission

Doron Vermaat, the founder of Efty.com shared an article on their blog today that I think should probably be required reading for new domain investors. Heck, I’d say it’s good for experienced investors to read as well since it’s a topic that should really be top of mind. In the article Doron shares some of his past domain sales history and the commission that he paid on these deals.

Commissions on domain sales can vary quite a bit from service to service but it’s no secret that domain listing services tend to charge a fairly hefty fee. Popular brandable domain marketplace Brandbucket for example charges a $10 listing fee, a $100 – $500 logo design fee, and a 30% commission which can mean that a pretty meaningful chunk of change can disappear if you make a sale through the service.

That being said, in many cases services like Brandbucket enable a sale that you might not have made without them so it’s hard to complain. Also domain investors can solve for this pretty easily by listing domains on services like Brandbucket for 30% – 40% more than what they actually want to sell for…but the question is, does this limit sales velocity?

In his article Doron recommended using For Sale Landing pages to take advantage of type-in traffic coming to the domain, which could be a potential buyer.

As you can see in the example above you can save thousands of dollars by harnessing the power of the type-in traffic on your domain name portfolio using your own For-Sale landing pages. An added bonus (and highly recommended) is that you can still list your inventory on any non-exclusive marketplace such as Afternic, Uniregistry, GoDaddy, Sedo, or Flippa to maximize reach and increase your portfolio’s exposure but you will prevent paying an absolutely unnecessary 10, 20 or even 30% in sales commission when your domain name sells trough direct navigation. (Source – Efty blog)

For me personally I definitely sell more domains through landing pages than through domain sales services. That being said, I do think that some of the names of sold through domain sales services would have likely never sold if they weren’t listed there.

What do you think? Comment and let your voice be heard!

{ 5 comments… add one }

  • Doron Vermaat October 10, 2017, 9:26 pm

    Thanks for the mention Morgan. I do agree that some marketplaces bring extended reach and repeat buyers but this is more the exception than it is the rule. If they would move much inventory on their “own” they wouldn’t make it mandatory to use their landing pages. Even a marketplace such as Undeveloped.com openly admits that “without parking with us that we wouldn’t add that much-added value. Using our for sales pages is critical for having success with us.”. Frank Schilling has also echoed this, saying the best platform to market a domain name is the domain name itself and that it’s the industries “little secret” that the majority of sales come from direct navigation.

    The question domain name investors should ask themselves is if it’s worth paying a marketplace anywhere between 15 to 30% commission on a sale that was most likely generated by their own “platform”, ie the domain name’s direct traffic or if they rather control their own leads and take 100% of their hard earned sales by using their own For-Sale landing pages such as those provided by Efty.

    Reply
    • Reza Sardeha October 12, 2017, 2:13 am

      Interesting arguments from Efty. Let me chip in with a different angle here. When you sell your domains with a marketplace like Undeveloped you simply lease all the technology and product development we put in a product you can use. We’ve so far invested over €1M in capital to fund Undeveloped. Without a commission based business model Undeveloped wouldn’t be where it’s at today. In terms of product and added value we’d be miles behind.

      The commission we make we keep investing in creating a more liquid marketplace for our sellers, which inherently allows the market to get further developed instead of standing at a standstill.

      The more sellers join Undeveloped and pay a commission the better the service will get, the more features we can ship and so on.

      I like the business model change companies like Efty would like to introduce ( we’ve also given it a thought) however when you do the math you’ll soon find out that there’s no way you can improve any market feature.

      Besides that, full-service marketplaces like Undeveloped bring significantly more to the table including sales support, internal escrow service and extremely helpfull customer support.

      If the entire industry aims to become a zero commission market you can expect the industry to slow down even more because innovation will stop and the services sellers and buyers will be able to use will not evolve.

      Take care,
      Reza

      Reply
    • Reza October 12, 2017, 2:48 am

      Domain investors should also ask themselves how much money they are losing by using a non- optimized for sales page. You might save some commission but will lose potential buyers that drop out instead of converting due to certain limitations and friction points.

      Now of course not everything is that simple, some portfolio’s might be better monetized via simple sales forms but the volume players happily pay a commission because they simply know how important it is to have an increased portfolio liquidity rather than saving on commissions.

      It’s a bit of an easy trap to fall into as you might think to save money but rather end up making less.

      It’s also not a secret that the domain name itself attracts buyers, that’s why it’s utmost important to have the best setup possible to convert those sellers. And in order to convert all sellers you need to go beyond a sales lander only as well.

      It might now seem as if I’m a big fan of keeping the current commissions in place but actually having said all the above I believe commissions could drop. However, that can only happen if there’s a new monetization model out there for marketplaces. The subscription model won’t work as it won’t allow any company in the market to grow significantly enough to have a real impact. If the entire market today switches to that model that would be the worst thing that can happen for domain investors as you’ll see the level of service and value-add by marketplaces to become very limited.

      There’s another model we’re announcing soon which I believe will actually work better for both sides of the table. Stay tuned for more ;).

      Kind regards,
      Reza

      Reply
      • Doron Vermaat October 12, 2017, 7:47 am

        Hi Reza, I fully agree with you that it’s very important that the landing pages investors use for their inventory should be optimized which is exactly why all For-Sale landing pages offered by Efty are tested and optimized for optimal visitor to lead conversion.

        For some of the most recent templates we’ve added to our galery we also partnered with some of the best upcoming brokers in the industry who have years of experience working inbound leads.

        I don’t agree with your assumption that the subscription model doesn’t work. It might not be the most profitable business model for a marketplace such as yourself but paying a small monthly or yearly subscription fee instead of commission on sales such as Efty users do definitely is the most profitable model for a domain name investor. Especially those that are comfortable and experienced enough to handle their own leads and maximize profits trough negotiating inbound leads.

        I would also like to argue that the level of customer support and client happiness at Efty is unmatched in the industry and we’ve shown a lot more value added innovation than the traditional marketplaces did the last couple of years. The reason for this might be because we’re a SaaS and not a marketplace.

        I’m looking forward to your announcement because imo Undeveloped is the only marketplace that is innovating and trying to do things differently. I am rooting for you guys 🙂

        Reply
        • Reza October 12, 2017, 8:06 am

          Hi Doron,

          Thank you for your reply. Like I said, I believe you guys are definitely innovative in terms of changing the business model for both sides of the table but I still think it’s still a tricky direction to go into if the entire industry decided to go for that model.

          I believe there’s a significant difference in the goals we have (which is a good thing) and that the business model in order to accomplish those goals therefor inherently differ.

          If we had adopted the same business model as Efty, Undeveloped wouldn’t be as developed as it is today, simply because we wouldn’t have enough resources to allow it grow in the direction we’d like it to go into. The bigger we get, the more value we can actually deliver to both our customers but also the industry overall.

          It’s a sensitive topic though. Sentiment is growing from sellers not being happy with the status quo, however if nobody wants to fund the change (by for example paying an commission), change might never come.

          Keep on rocking Doron! With over 100k parked names you guys are doing a great job.

          Kind regards,
          Reza

          Reply

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