About 90% of respondents in a recent poll indicated that offering a payment plan increases domain name sales. This is not surprising, as most major purchases involve payments over an extended period. In this post, I look at some of the ways to offer domain names with payment plans, the pros and cons involved with a purchase over an extended period of time, and a checklist of points to consider if you decide to list your domain names with payment plan options.
The Basics
Check the terms of any service you are considering using, but most payment plans work as follows. The purchaser pays the first monthly installment and then has use of the domain name for redirection or a website. Ownership is not yet transferred to them, however. Normally the marketplace or other third party collect payments and hold control of the domain name. After the final payment is made, domain ownership is transferred. In the event of non-payment, the domain name reverts to the seller, and normally the payments that have already been made, minus commissions and fees, are retained by the seller.
While a number of the venues that offer payment plan options also support rental of domain names, in this post I concentrate on ownership payment plans rather than domain rental.
Options
There are many options for those who seek to sell domain names with installment purchase plans. I list some of the most common ones below.
In preparing this article, I reached out to two of the largest domain name marketplaces. While Afternic occasionally arranges payment plans when requested for high-value sales using third-party services such as Escrow.com or DomainCapital, Afternic do not offer payment plans in-house or for most domain names. Afternic has not sensed strong buyer demand for payment plans, particularly at the price levels where most domains sell.
The situation at Sedo is similar, occasionally offering the option on high-value domain name sales through third-party services, but no marketplace-wide payment option.
DomainAgents offer payment plan options through Escrow.com.
Why Offer Payment Plan Options?
There are a number of clear advantages to payment plan options on domain name purchases.
Some Possible Negatives of Payment Options
Nevertheless there are possible concerns with offering payment plan purchases that you should keep in mind. These concerns include the following.
Just for High Value Domain Names?
At first I thought that payment plans only made sense for high-value domain names, but when I saw how trivial they were to implement, I changed my view. In some ways small businesses just starting out may be the clients least able to pay up-front the total cost of the domain name. DAN currently set a lower limit of $495 for domain names offered under payment plans, while Epik does not set limits.
Checklist
While it is easy to implement purchase plans on various platforms, that does not mean that you should do so without due diligence. This is one situation where reading those terms of service completely is a must!
Here are some things to check.
Final Thoughts
It has become fast and easy to offer payment plans for domain names. I think it is likely payment plans help close more sales, and that they will soon become even more standard. HugeDomains have offered payment plans for some time.
Individually arranged purchase plans go back almost to the start of domain name sales history. What has changed recently is the ease of implementation of purchase plans through administration of those plans handled by a marketplace. They have also become cost-effective for even modest domain name sales.
The purchase plan option already seems fairly popular according to some domain names I browsed at the Epik Marketplace.
NamePros members have already indicated sales that they think would not have closed without the payment option. Situations where the single price was too high for the potential purchaser but they were able to handle a payment plan illustrate the effectiveness of the option in helping close sales. Occasional cases of buyers abandoning the domain name after just a few payments have also been reported.
Especially for high-value domain names, consider the potential concerns with payment plan sales, however. High-value transactions may benefit from using a legal representative who will create or review the agreement to make sure your interests are protected.
Overall I am surprised that payment options are not universally offered. As said by @Larion
What Do You Think?
Don't forget to vote in the poll associated with this thread. Also, I would love to hear your experience and views on payment plans for domain selling.
The Basics
Check the terms of any service you are considering using, but most payment plans work as follows. The purchaser pays the first monthly installment and then has use of the domain name for redirection or a website. Ownership is not yet transferred to them, however. Normally the marketplace or other third party collect payments and hold control of the domain name. After the final payment is made, domain ownership is transferred. In the event of non-payment, the domain name reverts to the seller, and normally the payments that have already been made, minus commissions and fees, are retained by the seller.
While a number of the venues that offer payment plan options also support rental of domain names, in this post I concentrate on ownership payment plans rather than domain rental.
Options
There are many options for those who seek to sell domain names with installment purchase plans. I list some of the most common ones below.
- BrandPa
A short time ago, BrandPa rolled out payment plan options up to 24 months for purchasers. - DAN
To implement a purchase plan option for fixed-price domains at DAN, simply select this choice in your account settings. That will trigger payment plans on all of your fixed-price domains with prices of $495 or more, but you can then from yourPortfolio viewat DAN turn the option on or off for individual domain names. DAN also offer a separate monthly rental option. There is a NamePros thread on Undeveloped/DAN payment plans and the topic is also covered in the Undeveloped experience thread . - Epik
Epik was possibly the first registrar to implement payment plans back in 2013, and when you list one of your domains on their marketplace the payment plan options are central. Epik has a variety of pre-built options that you can choose among. Epik has the most versatile set of payment plan options, with the possibility to change monthly payment, number of months and interest rates. They do not set a minimum price for a domain name to be included in their payment plans. Epik also offers renting of domain names. The Epik landers show potential purchasers the direct purchase price, payment plan terms and a make offer option. It has not yet got much traffic, but @Rob Monster started a Domain Leasing Masterclass on NamePros. - Escrow.com
At least as long ago as 2010 Escrow.com offered payment options. Here are the details of the Escrow.com current plan, including the associated terms and fees. - NameSilo
Domain names registered at NameSilo and sold through their marketplace include a payment plan option. It is simply a matter of checking that option when the domain name is listed on the marketplace. On the domain lander the potential client is shown a buy now price, a payment plan option, as well as a make offer option, if activated. - SquadHelp
SquadHelp offer payment plan options on some domains at their site. - Transpact.com
Another option for domain transactions is Transpact.com. A representative from the company indicated to me that they conduct payment plan domain name transactions every day. - Uniregistry
Uniregistry offer their own payment plan as well as the option to complete a payment transaction through Escrow.com payment plans. - Legal Representative Options
It is also possible to implement any type of domain payment plan through the services of an attorney. Among firms offering this service are Greenberg & Lieberman, DNAttorney, and John Berryhill (@jberryhill), among others. - Do It Yourself
Another option would be to handle the payment system yourself, by drafting the terms of the agreement and setting out how payments would work. This offers the most flexibility with lowest cost, but the case for having legal assistance, or using a third-party, is strong for valuable digital assets. Also, some potential clients will prefer that a third-party is involved.
In preparing this article, I reached out to two of the largest domain name marketplaces. While Afternic occasionally arranges payment plans when requested for high-value sales using third-party services such as Escrow.com or DomainCapital, Afternic do not offer payment plans in-house or for most domain names. Afternic has not sensed strong buyer demand for payment plans, particularly at the price levels where most domains sell.
The situation at Sedo is similar, occasionally offering the option on high-value domain name sales through third-party services, but no marketplace-wide payment option.
DomainAgents offer payment plan options through Escrow.com.
Why Offer Payment Plan Options?
There are a number of clear advantages to payment plan options on domain name purchases.
- Close Sales Some potential clients can not afford to buy the domain name outright, and a payment plan will help them spread the payments over a period of time while their business will be generating revenue.
- Reduce Sticker Shock Many potential clients are shocked at the prices that quality domain names sell at. This may be reduced if potential purchasers are presented with options for both outright purchase and payment plan monthly fees, as for example the DAN, Epik and NameSilo domain landers implement.
- Try Out A Domain Name Some businesses may not be sure about either the domain name or their business, and may see payment plans as a way to secure rights to the domain for a low initial cost. If it doesn’t work out they simply stop payment.
- Even Out Domain Investor Revenue For tax or other purposes it may be better for you as a domain investor to have a regular monthly income as opposed to occasional large lump-sum payments. The regular revenue may also help you avoid impulsive acquisitions after being flush with cash following a high-value sale.
Some Possible Negatives of Payment Options
Nevertheless there are possible concerns with offering payment plan purchases that you should keep in mind. These concerns include the following.
- You Won’t Have Much Money Right Away is the obvious drawback to payment plans.
- The Buyer May Sample and Drop It is hard to know what fraction of payment plans end this way, but I would not be surprised if fairly often after a few payments the purchase is abandoned, and you need to start selling the domain name all over again.
- The Domain Name May Suffer Harm If the buyer stops paying, and the domain name is returned to you, the situation is particularly negative if the domain name has been used in any way that makes the domain less sale-worthy. It should be noted that most, or all, of the payment plan options have terms outlining how the domain may and may not be used to partly mitigate this concern. At the very least, however, the domain name may have the reputation of being associated with a failed business.
Just for High Value Domain Names?
At first I thought that payment plans only made sense for high-value domain names, but when I saw how trivial they were to implement, I changed my view. In some ways small businesses just starting out may be the clients least able to pay up-front the total cost of the domain name. DAN currently set a lower limit of $495 for domain names offered under payment plans, while Epik does not set limits.
Checklist
While it is easy to implement purchase plans on various platforms, that does not mean that you should do so without due diligence. This is one situation where reading those terms of service completely is a must!
Here are some things to check.
- What are the rules governing the use of the domain name? Is it made clear that it can’t be used for anything illegal or that would lessen the worth of the domain name (such as spam use)?
- When am I paid and what is the commission? Are you paid each month as the purchaser remits payments, and if so, are commissions taken out monthly or all up-front?
- Who holds the domain name while payments are made? Does the domain stay registered in your name, or in the name of the marketplace or some other option. This will become important if serious misuse of the domain name occurs.
- What is the grace period? While the buyer is expected to make monthly payments, usually there is a short grace period when payments could be late.
- Exactly what happens if the buyer defaults on payments? It is important to be clear on the process and financial arrangements should the buyer cease to make payments.
- What is the process for oversight and action, if necessary, for misuse of the domain name?
- Who is responsible for renewal fees while the domain payments are being made? For a premium renewal domain name being sold over an extended period at a modest price this may be important.
- Are there additional fees beyond the standard commission charges?
- What are the holds, options and fees for payout? If payments to the seller are made monthly, and each involves a transaction fee, these can add up.
- Do you want to add interest? If so does the system support that?
Final Thoughts
It has become fast and easy to offer payment plans for domain names. I think it is likely payment plans help close more sales, and that they will soon become even more standard. HugeDomains have offered payment plans for some time.
Individually arranged purchase plans go back almost to the start of domain name sales history. What has changed recently is the ease of implementation of purchase plans through administration of those plans handled by a marketplace. They have also become cost-effective for even modest domain name sales.
The purchase plan option already seems fairly popular according to some domain names I browsed at the Epik Marketplace.
NamePros members have already indicated sales that they think would not have closed without the payment option. Situations where the single price was too high for the potential purchaser but they were able to handle a payment plan illustrate the effectiveness of the option in helping close sales. Occasional cases of buyers abandoning the domain name after just a few payments have also been reported.
Especially for high-value domain names, consider the potential concerns with payment plan sales, however. High-value transactions may benefit from using a legal representative who will create or review the agreement to make sure your interests are protected.
Overall I am surprised that payment options are not universally offered. As said by @Larion
I agree!In fact, I am wondering why Domain-Marketplaces have NOT implemented such options until now? It's actually [unwise] not to provide such options to the buyer.
What Do You Think?
Don't forget to vote in the poll associated with this thread. Also, I would love to hear your experience and views on payment plans for domain selling.
- Do you use payment plans?
- Have you sold any domains yet on payment plans?
- Have you had problems with payment plan transactions?
- Have you ever bought a domain name on a payment plan?
- What additional services offering payment plans should have been included in this article?
