NameSilo
Bob Hawkes

Domain Name Payment Plans

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By Bob Hawkes, Nov 7, 2019
?

Do you currently use payment plan options on your domains?

  1. Yes, but for less than 25% of my portfolio

    46 vote(s)
    19.6%
  2. Yes, for 25% to 75% of my portfolio

    27 vote(s)
    11.5%
  3. Yes, for 75% to 99% of my portfolio

    17 vote(s)
    7.2%
  4. Yes, on my entire portfolio

    26 vote(s)
    11.1%
  5. No, but I am considering doing so in the future

    76 vote(s)
    32.3%
  6. No, and I never will

    43 vote(s)
    18.3%
Total: 235 vote(s)
  1. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent Gold Account VIP Trusted Blogger

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    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.
    • 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 your Portfolio view at 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.
    1. 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)?
    2. 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?
    3. 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.
    4. 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.
    5. 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.
    6. What is the process for oversight and action, if necessary, for misuse of the domain name?
    7. 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.
    8. Are there additional fees beyond the standard commission charges?
    9. 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.
    10. 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!


    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?
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
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  4. Bob Hawkes

    About The Author — Bob Hawkes

    Domain analyst, writer and educator, with particular interests in domain name phrases and non-business uses for domain names. I am a risk averse domain investor who only invests modest amounts in a variety of extensions and niches. Don't hesitate to contact me - I like to help!

    This is Bob Hawkes's 14th blog post on NamePros. View all blog posts

    Home Page:
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  5. Comments (30)

  6. The Durfer

    The Durfer Upgraded Member Gold Account VIP

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  7. Riz M.

    Riz M. EmpireNames.com Gold Account

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    Payment plan is getting stronger day by day my 75% names are on payment plans
    i sold couple of domains in installments and i am happy with every month installments :)
     
  8. Domain_savvy

    Domain_savvy Established Member

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    This documentation is so good.
    Thanks Bob for all your efforts 👍
     
  9. Page Howe

    Page Howe Top Member PRO Gold Account VIP ★★★★★★★★★★

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    these work great.... BUT.

    realize a leasee may try to gain homesteader type rights, or even worse operate in a manner that makes it appear they own the name... and open the name itself up to lawsuit, judgements etc.

    so i would add some language they need represent BlahBlah.com (operated under lease) and also strictly agree up front, that the owner retina the right to be and operate with WIPO or lawsuit on the domain name should it revert back.. pleas consult an attorny blah blah blah

    page
     
  10. HandMadeDomains

    HandMadeDomains Established Member

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    Excellent article Bob, thanks!

    I like the concept in principle.
    My hesitation comes from how the domain is used.
    If the renter eventually buys it, no problem.
    But if not, how will past usage affect the brand?
    Epik's options are very thorough. As I said elsewhere, like riding a racehorse for the first time.
    Ultimately it's a reflection that the domain market can and should be dynamic and we now have affordable ways to do it.

    Tom
     
  11. Don Gondon

    Don Gondon Established Member

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    I have a feeling that the perceived "increased affordability" due to plans makes some sellers raise their prices so that there is no increased affordability in result.

    I also have a feeling that some buyers are aware of that; also some buyers would extrapolate and see every plan-supported domain as more expensive than it should be.
     
  12. wwwweb

    wwwweb Top Member VIP ★★★★★★★★★★

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    Majority of major purchases these days are done on some sort of payment plans, homes, cars, high end watches, diamond rings, and I have some people offer vacations, and tires on payment plans also.

    It allows people to step into a domain, and try to make something happen, and if you can make that happen why not, what is the worst that can happen, they make a few payments, and default, and you get the name back, and keep a few months of payments?
     
  13. DpakH

    DpakH Upgraded Member Blue Account

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  14. Alvin Brown

    Alvin Brown Member VIP

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    Bob - what a gem of an article you've delivered. It goes without saying, a big tremendous thank you for your treasured insight and findings. 👏🏾
     
  15. Internet.Domains

    Internet.Domains Top Member VIP

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    Payment plans work for cars, boats, planes, homes, real estate etc, etc.....Surely, payment plans work for domains.
     
  16. Embrand

    Embrand Top Member ICA Member Gold Account VIP ★★★★★★★★★★

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    Great article as usual!

    Here is my opinion about the payment plans I have tried out:

    Epik: Has the most plans to choose from, and it is great to have your registrar and financials together. Still needs some improvements regarding bulk updating of sales landers, e.g choosing background picture and which widgets to include.

    DAN: Good basic payment plan, but not much to choose from, and it is not possible to offer buyers both installment plans and rental at the same time. Maybe the next update will provide this?

    NameSilo: A nice feature is that buyers can choose how much they want as down payment and additional installments. Their system also automatically reduces the number of installments available if the domain only has a few months left before expiry. But I think it might turn some buyers away that the domain must stay at NameSilo for 60 day after purchasing.

    Escrow.com: Has worked okay for me, but a bit elaborate with regards to documentation and setting up the transaction.

    I think it is safe to say payment plans are here to stay and will only become more important in the future.
     
  17. DanSanchez

    DanSanchez Top Member VIP

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    Payment plans encourage two very important things, this is from the Epik perspective which is IMO the most stable option:

    1. Earning consistency, delaying the reward of a sale is incredibly useful for creating consistency during lean times.
    2. Bigger sales, buyers are happy to say YES (which is our goal) to bigger numbers into the 5-6 figures.

    Even with a BIN price at Epik, you can encourage people to send you an offer. The opportunity is there for them to see a mid-level price in a single payment. In fact, I am waiting on a payment tonight for a name that was priced in the high 5 figures and they offered a decent amount as a single payment they could afford today.

    From two sales, I was able to cover all my basic monthly expenses for a YEAR. It's a great feeling.
     
  18. Silentptnr

    Silentptnr Top Member VIP

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  19. Silentptnr

    Silentptnr Top Member VIP

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    I agree wholeheartedly. I also like reading your stuff!
     
  20. Abdullah Abdullah

    Abdullah Abdullah Top Member Epik.com Staff VIP

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  21. Arfy

    Arfy Cola.com Gold Account VIP

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    Fantastic post Bob.

    I didn't think of that as a reason but it is a good one. Also looking at the opposite side of the transaction, it may also make sense for the buyer to split the cost of the domain over a number of financial years for tax purposes and / or cash flow reasons. I.e. deducting costs from revenue prior to tax payment and dividend extraction and repeating this for the next year to allow consistent tax and dividend deductions.

    This could also be seen as a positive. You have obtained a few months of payments and still retain your asset which you can sell again. Although I do agree that in this case it might have been better to have offered the domain at a lower price for a traditional cash for domain purchase.

    Epik seems to have the most versatile payment plan options available and I am offering one of my most prized domains on a payment plan there. The only drawback I see is that payments cannot exceed more than 25k a month. This limits occasions where, for example, a domain is worth 1M and you are prepared to lease it for 2 years with initial down payment of 100k. This would mean 900K is split over 24 months at $37.5k per month - currently not possible due to the 25k per month limit, thus forcing a higher down payment.
    Another restraint is a maximum term of 10 years. So for the same principal amount as above, if we want to do $1M with an initial $100k down payment with remaining amount of 900k paid over monthly installments of say $5k per month (not an unreasonable agreement) this would mean full repayment would be complete in exactly 15 years (I'm ignoring interest etc here). This would not be possible due to the maximum 120 month term.
    Also initial payment can't exceed $1M (most of us will never need that option though).
    Tagging @Rob Monster in case he wants visibility into this or shed some light on possible good reasons for implementing such restrictions.

    Apart from the above which may be considered edge cases, I love the Epik payment plan options which can be tailored to fit most needs and give a lot of visibility to the end user when actually displaying the payments due at each interval and interest at each payment.
     
    Last edited: Nov 8, 2019
  22. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent Gold Account VIP Trusted Blogger

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    Thank you for all of the great reflections everyone.

    @Page Howe raises a good point re who represents the domain name if there is a UDRP case. I presume the notice would go to the person who is the official registrant, but clearly it is complex if you have an owner, someone else using the domain that will impact some aspects of the UDRP and a third party who are in charge during the payment periods.

    Thank you for your longer comment, and I definitely agree with what you say including this closing remark. It is great that there are options and we should decide if they are right for us and this specific domain.

    @Don Gondon asks a good question will the payment plan result in owners asking higher prices, and /or those buying domains think that will be the case. I think that is totally possible.

    Great set of reflections on four of the options @Embrand. I agree some definitely want to offer both a rental option alongside a payment plan option. I had not realized that NameSilo reduced the months automatically in terms of time to expiry. It is an important point.

    I totally agree. Congrats on the two sales that have set you up for a year, and I think domaining would be so much less stressful if many of us had made payment plan sales that generated a regular revenue stream to cover renewals, other costs and ideally income.

    I understand that during the last economic downturn (2008-9) some domain investors were forced to liquidate part or all of portfolios at prices below what the domain names were worth. The steadier the revenue stream the more we are protected.

    I agree. I also agree with your comment on the clarity of how Epik present to the buyer both the legal terms and what the payment schedule is with exact amounts at each date. Of course the multitude of variables they offer make this clarity necessary.

    Thanks again for all of the great reflections (not just the ones I specifically mentioned here specifically).

    Still early days in poll, but it looks like less than 10% would never consider offering payment plans.

    Bob
     
  23. venohm

    venohm New Member

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  24. marcreative

    marcreative Established Member

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    Thank you for the articles Bob, yes payment plan been helpful to increase sales.
     
  25. lock

    lock PremiumNameDomain.com VIP

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    Probably most comprehensive article to date. Surpassed my thinking but need math for money.
     
  26. BradWilson

    BradWilson Upgraded Member Gold Account

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    Again an excellent article with great information and feedback.

    It reminds me of my typo rental I had many years ago. I rented out the traffic for a typo of Morpheus during the heyday of the music downloading era and earned over $30k until everything died out. The domain itself wasn't that valuable but the traffic at the time was.

    It was a Do It Yourself payment plan that worked really well because the customer probably was earning way more then he was paying me - oh well.

    Once he stopped paying (because the heyday was almost over), I took back control of the domain and quickly learned how to convert the traffic myself just like he was doing.

    Unfortunately, I only earned a small fraction of what he had been making but it was still pretty good at least for awhile.

    Today, I think I'm more aware of the potential value of my domains so I'd hope I wouldn't repeat this mistake again.

    Overall it worked out well but I could have made way more if I'd had done my research earlier.

    Today I think payment plans are pretty much required for any marketplace and they are definitely an excellent way to increase sales.
     
    Last edited: Nov 9, 2019
  27. sharastar

    sharastar Established Member

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    Thanks @Bob Hawkes for this wonderful Article on Payment Plans.As always everything needed to know about Payment Plans is covered very well
     
  28. NicTraders

    NicTraders Upgraded Member Gold Account

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    Great article Bob. I have payment plans enabled at DAN, however removed all my BIN's a while ago, so it doesn't actually display anymore. DAN contacted me once about a buyer who had requested a payment plan - I was more than happy to oblige and he paid it out early anyway. It would be good if Make Offer domains also had a button to 'enquire about a payment plan' or similar so that the potential buyer thinks about that option from the start.

    Most importantly though, your article made me wonder how many more domains I could have sold if I provided this option during negotiations. Fairly frequently I get the usual line of 'I only have limited funds' or 'your price is too much'. I always see that as part of the negotiation tactics and sometimes a deal is still done (when I won't drop my price by 90% like the buyer wanted), but often negotiations will fall over. I wonder: instead of just dropping my price a little in negotiations and trying to meet somewhere in the middle, if I offer a payment plan instead, that might capture some attention from buyers who really don't have the money up-front. So potentially they offer me $100 for a domain I want $1,000 for. They come back saying they don't have that much so I say 'OK, how about a payment plan'. Seems like it's worth a go. Now I just need to remember to try it out next time! Has anyone tried using it as an alternative during negotiations like this?...
     
  29. handpicked

    handpicked Established Member

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    Superbly crafted piece from Bob as always. Payment plans might help to liquidate and circulate some of the high value domains to help creative end users (with less upfront budget) which are other wise tossed endlessly between wealthy domainers. IMO.
     
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