Lease-to-own domain sales are picking up. Here’s my data

More and more of my recent sales have been LTOs.

Lease-to-own transactions are becoming a bigger part of my domain sales, and they seem to be picking up: five of my last six domain sales are LTO transactions, compared to just three of the prior 15.

I decided to dig in to make sure LTOs are working for me and if I should make adjustments. Here’s what I found.

Of 26 LTO transactions initiated:

• 4 have completed (including one paid early)
• 6 were canceled
• 16 are ongoing

It’s not fair to say my cancellation rate is just 23% (six of 26) because I won’t know until the other 16 are completed.

Of the cancellations, they averaged 25% complete before canceling. For all of the canceled domains, the first payment more than covered my out-of-pocket costs for the domains.

One of the domains that was canceled after 5 of 24 payments sold about a year later at a buy now price.

Of the 15 ongoing LTOs, six have been developed. A domain being developed is a good sign that the buyer will keep paying, but not always: the one domain I’ve sold on LTO that canceled after just one payment was immediately developed.

The durations of my ongoing LTOs range from 8 months to 36 months.

With my limited data, it’s hard for me to make adjustments to my approach. But the big marketplaces seem to suggest limiting LTOs to 2-3 years, as cancellation rates increase for anything longer. I no longer allow leases more than 26 months, and most are set to 13 or 14 months.

If a domain seems particularly hot (e.g. multiple inquiries or a trending topic) I lower it below 12. I don’t want to miss out on a full sale opportunity by locking the domain up in an LTO that might cancel. I have a $30k LTO going on right now that I limited to just 8 months.

The marketplaces also all say that sell-through rates increase if you allow LTOs, and this makes sense. I interviewed an entrepreneur recently who upgraded to an expensive .ai domain. He was bootstrapping his business and told me he wouldn’t have been able to acquire the domain without a payment plan.

I’m curious to hear what others are experiencing with lease-to-own sales.