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.
Mark Thorpe says
The only scenario here is that domainers are getting screwed as usual.
Park your domains with Godaddy or pay more commission fees than you did before February 1st! Greedy shareholders!
Mike says
Here’s my scenario. I sell 20 domains each year, use Escrow.com to collect payment, OR they pay direct by Bank Wire and my commission is : 20 X Zero = $ Zero commission. Good isn’t it !.
WebSniffer says
It seems like there are some potential opportunities for domainers to minimize their commissions under the new system, but it will definitely require careful planning and analysis.
J.R. says
Absolute best case scenario.
A simple drag-n-drop no code sales lander domain portfolio template for private purchase and use is needed.
Domains establish value, not platforms.
For quality assets, buyers will find you if you have a private sales lander.
Namecheap is said to be replicating Dan model with its new Spaceship service.
But we will see, there will come a day when domainers take full control of their own portfolios.
JohnH says
Andrew, You’ve been advertising SAV on the pod for a while now. I wonder if you might consider a blog post comparing SAV to what DAN offers. I think a 4% commission is looking very attractive to domain investors at the moment.
Steve says
Domainers get the short end of the stick yet again.
As the result of this wolf-in-sheep’s clothing foolishness; when the Afternic / GoDaddy brokers come calling; the prices I would have been willing to accept on my high-value .coms just went up.
Enjoy.
Fred Kauber says
This kind of consolidation of platform power is ultimately how companies get synergy from their acquisitions so not at all surprising. It’s also what sparks innovation in competitors to fill the gaps created.
For those that don’t bolt from GoDaddy platforms as a result of this, it certainly makes enabling the AfterNIC distribution option for domains with DAN landers a no-brainer now (BTW, Dan still has the commissions for this option listed as 20% on their Settings page for this option as of this writing).
I will give credit where credit is due for not raising the 5% fee for leads, which makes outbounders and those selling domains <$5000 on AfterNIC the biggest "winner" in this change.
It will be interesting to see the ripple effects on other platforms in the ecosystem. Is the utility of a platform like Domain.io still as useful if you don't need to maintain different prices on DAN and AfterNic to account for differing commission structures?
There is no doubt an aftertaste to this change, but if GoDaddy continues to command the eyeballs and continues to make improvements to their platform user experience, that may still overcome any distaste among domain investors if they remain the most efficient place to list. The sheer effort to maintain large portfolios and maximize sales is still the greatest tax imposed on domain investors.
Whale says
Just increased prices on all Dan listings by 10%. “Set it and forget it”
Ryan says
One Scenario that I think is overlooked, maybe because its a rare situation, is using Dan landers with A records instead of nameservers. I point all my domains to Dan.com landers using their A records on my registrar default nameservers so I have full control over the DNS to add things like the verification TXT records for other marketplaces (aka Sedo), or MX records for email forwarding. Since I am not using official provided nameservers I think I would end up owing 25% commission despite “technically” using Dan’s landers. Will probably just increase prices on my Afternic/Dan listings and switch to my own landers moving forward.
Andrew Allemann says
It’s a good point. I’ve thought about that on how I use Uniregistry. I also use A records for many of the domains I point there. However, since the domains are registered at GoDaddy and use GoDaddy’s nameservers, it probably won’t be an issue for me. I suspect if there’s a case you are charged the higher commission, you’ll be able to bring it up with them.