Some will win and some will lose under new commission structure.
GoDaddy’s (NYSE: GDDY) long-awaited “commission alignment” will go into effect on February 1. The new structure offers an incentive for people to use landers in the GoDaddy family of companies.
Commissions will be a flat 15% for domains that are parked on a GoDaddy service, including GoDaddy, Afternic, Uni or Dan, regardless of whether the domain sells through the lander or Afternic network.
Domains parked elsewhere will carry a 25% commission when they sell on the Afternic network.
This compares to Afternic’s current rates of 20% for transactions up to $5,000, 15% on the amount up to $25,000, and 10% on the amount above that. Dan.com currently charges a 9% commission and Uni charges 3% for self-brokered sales.
Under the new structure, customers could pay a lower commission on Afternic network sales than they do now. But they’ll pay a higher rate on domains they sell at Dan.com or Uniregistry.
I haven’t done a complete calculation, but my back-of-the-envelope math suggests I would have saved a bit of money if this structure had been in place last year. I sold many more domains on Afternic than I did on Dan, and most were under $5,000, so the 5% reduction in commissions on Afternic would outweigh the 6% extra at Dan.
But for people who mostly sell on Dan.com, or who mostly sell higher-ticket domains above $5,000, the new structure will probably cost them more. And if your park your domains outside GoDaddy’s ecosystem, be prepared to pay a higher commission than before.
The commission schedule could have an adverse impact on alternative landing page and parking services. Domain investors can park their domains on competing landers such as Sav (4% commission), SquadHelp (7.5%), or Efty (0% without escrow). However, if they end up selling the domain at Afternic, they’ll pay 25% rather than 15%.
GoDaddy confirmed to me that it is retaining the import-a-lead option at Dan. The fee for that service remains 5%.
The more I see of these Cpmpanies, GoDaddy, Dan etc etc, the more I realise that the best thing to do is carry on seling directly, which is what I mainly do. These commissions add up and come straight from sellers pocket. IF a Company wants to buy “A” Domain then they will still approach direct sellers and buy via Escrow.
It’s hard to disagree with Mike’s comment. I think that smart cookies, like Mike, will figure our ways to sell directly, while still listing their domains at afternic, godaddy, and dan for promotional purposes. I think a fee of e.g. $1000 from a $5000 sale (20%) is pretty high.
Andrew, as always, thank you for your articles. I am inquiring with my Afternic rep on whether SmartName.com parking company (Larry and Ari’s creation) that Godaddy owns would be under this umbrella of the 15% commission rate. Just wondering if this long forgotten purchase by Godaddy may be covered. Again that you for your articles and research.
Hi Hugh,
I can answer this – SmartName.com will be under this umbrella.
It’ll be interesting to see what large volume portfolio owners like Mike Mann will do. Whether they’ll move to GoDaddy DNS, or they will delist entire inventory from Afternic. Staying at non-GoDaddy lander and “risking” to pay 25% is the worst scenario. 25% is a lot!
@James Iles – are you able to confirm that the 15% and 25% will be fixed, with no reduction above $5k, $25k like now?
Volume portfolio owners will always get their own deals.
@aw – I confirmed with Paul Nicks that there is no reduction over the thresholds.
I was thinking about the big guys like HugeDomains. I agree with John, I’m sure these guys have their own deals.
This is the problem when you reach a near monopolistic state… you keep acquiring competitors and suddenly commissions are 25% if you aren’t giving them free advertising. Also, remember, there are many buyers that ONLY want to use Godaddy, no matter how many escrow alternatives you present them. I’ve seen plenty of those the past 25 years.
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That was predictable. GoDaddy is one of the worst companies out there. Too bad DAN sold out TO THEM. If they don’t change it back, I wish all the worst, business-wise, to DAN.
I guess you’re SOL if you don’t park your domains with Godaddy companies.
15% would have made more sense for non-parked domains than 25% and 10% for parked domains instead of 15%.
But as usual it’s shareholders first and domainers last. Gong Show!
“Some will win and some will lose”
Some are born to sing the blues
Whoa, the movie never ends
It goes on and on and on and on…
Well, that one will be stuck in my head all day.
And I’ll stiiiill be thinking of Tony S.
Who got his percentage now that he’s, you know, “gone”?
Don’t stop…
In a perfect world, marketplaces would charge commission based on the lead generator. If the buyer came to the domain/landing page directly, a lower commission would be charged. However, if the sale was a result of the actual marketplace listing or one of their registrar partners, a higher commission is warranted.
I thought they might go this way — something like 20% for Afternic network and 10% for landing page sales. I’m sure they looked at how many sales from from landers vs. the network to calculate their changes.
I don’t wish “all the worst” to DAN, but knowing GoDaddy this was indeed very predictable.
Sold a domain via DAN yesterday. Loved the 9%. And of course the SUPER-FAST payout!
Hopefully GoDaddy will not screw that up.