Dan.com

analysis Dan.com Markup Fee vs Escrow.com

NameSilo
Impact
728
I just wanted to raise awareness around the Dan.com business model and in particular the markup fee.

I think Dan.com are overall doing a great job to shake up the industry but one of the reasons their business model is so effective is the huge cut they take from lease-to-own arrangements.

In my opinion it's not really clear how Dan.com fees work so I will break it down in an example.

I've seen the term 'domain financing' used a lot in the coverage of Dan.com. This is poor wording. If Dan.com were to provide the seller with a full payment upfront this would be 'financing'. As it stands the risk is still squarely on the domain seller.

Let's take an example sale of $9,600.

The domain is priced at $8,000 on Dan.com and a plan is selected to pay over 24 months.

Your fees payable in this instance are $400 (assuming the lead came through your own lander) and then a tasty $800 service fee for managing the installments. $1200 total, so the final fee is actually 12%.

Now let's look at installments through Escrow.com.

For a sale of $9,600 the upfront fee is $175 and then a monthly management fee of $25 is payable for self-managed DNS. This is as simple as setting up a Cloudflare account and away you go. For me this gives me ongoing control over the domain in the unlikely event Dan.com goes out of business, and my buyer doesn't have any trust preference between Dan.com vs Escrow.com anyway.

The total payable in this case is just $775. That's another $425 in your pocket and a closer relationship with your buyer (which in my opinion is good for business).

By my calculation for any domain priced above $6,000 the installments are cheaper to manage through Escrow.com.

Just something to be aware of.
 
Last edited:

karmaco

Top Contributor
Impact
8,983
I avoid Escrow at all costs and will use anyone else if I can. They made a mess of my first major sale years back and every of the few transactions I did there had some glitch or excessive slowness about getting paid. Sometimes commish is worth it to have lightning fast transactions with someone you can count on.
 

alcy

Top Contributor
Impact
34,744
I just wanted to raise awareness around the Dan.com business model and in particular the markup fee.

I think Dan.com are overall doing a great job to shake up the industry but one of the reasons their business model is so effective is the huge cut they take from lease-to-own arrangements.

In my opinion it's not really clear how Dan.com fees work so I will break it down in an example.

I've seen the term 'domain financing' used a lot in the coverage of Dan.com. This is poor wording. If Dan.com were to provide the seller with a full payment upfront this would be 'financing'. As it stands the risk is still squarely on the domain seller.

Let's take an example sale of $9,600.

The domain is priced at $8,000 on Dan.com and a plan is selected to pay over 24 months.

Your fees payable in this instance are $400 (assuming the lead came through your own lander) and then a tasty $800 service fee for managing the installments. $1200 total, so the final fee is actually 12%.

Now let's look at installments through Escrow.com.

For a sale of $9,600 the upfront fee is $175 and then a monthly management fee of $25 is payable for self-managed DNS. This is as simple as setting up a Cloudflare account and away you go. For me this gives me ongoing control over the domain in the unlikely event Dan.com goes out of business, and my buyer doesn't have any trust preference between Dan.com vs Escrow.com anyway.

The total payable in this case is just $775. That's another $425 in your pocket and a closer relationship with your buyer (which in my opinion is good for business).

By my calculation for any domain priced above $6,000 the installments are cheaper to manage through Escrow.com.

Just something to be aware of.

hmm isnt it 9percent and nothing extra for no one upto 12months..which is prolly what most use... and then if over that then its buyer who pays extra... not seller

in fact I even thought if over 12mo then both dan and seller get bit extra per month

@LaszloSchenk
 

alcy

Top Contributor
Impact
34,744
Escrow works like a shit for non US based buyer/seller
With dan I often have installments that not goes at the end. Buyers sometimes stop to pay after 1 or 2 months

very true.. if outside usa..and u cant do wire to bank then yer screwed

and believe it or not some banks in world like tangerine still got no swift and no wire lol
 

DAN.COM

Domain Marketplace
Dan.com Staff
Impact
4,246
Keep in mind that Dan sellers get 15% more revenue due to our markup model.

When you sell a domain for $10k in 60 installments, the seller actually get's a commission-free transaction paid for by the buyer because 15% markup is given to the seller as an incentive to offer long-term payment plans of up to 60 months. This model automatically increases the BIN price that the seller gets from $10,000 to $11,500.

Check out this blog post with more information about the psychology and success factor behind our unique LTO model: https://blog.undeveloped.com/introducing-domain-financing-2-0-cd82edbb79c4

The markup even functions as a negative incentive to make sure buyers that can pay the full price now, to not go for a long-term purchase.
 
Impact
734
Keep in mind that Dan sellers get 15% more revenue due to our markup model.

When you sell a domain for $10k in 60 installments, the seller actually get's a commission-free transaction paid for by the buyer because 15% markup is given to the seller as an incentive to offer long-term payment plans of up to 60 months. This model automatically increases the BIN price that the seller gets from $10,000 to $11,500.

Check out this blog post with more information about the psychology and success factor behind our unique LTO model: https://blog.undeveloped.com/introducing-domain-financing-2-0-cd82edbb79c4

The markup even functions as a negative incentive to make sure buyers that can pay the full price now, to not go for a long-term purchase.
it's not right for 12 months installments there is no markup, markup depends of period.
the longer the period, the greater the risk of non-payment ...
 
Last edited:

alcy

Top Contributor
Impact
34,744
Keep in mind that Dan sellers get 15% more revenue due to our markup model.

When you sell a domain for $10k in 60 installments, the seller actually get's a commission-free transaction paid for by the buyer because 15% markup is given to the seller as an incentive to offer long-term payment plans of up to 60 months. This model automatically increases the BIN price that the seller gets from $10,000 to $11,500.

Check out this blog post with more information about the psychology and success factor behind our unique LTO model: https://blog.undeveloped.com/introducing-domain-financing-2-0-cd82edbb79c4

The markup even functions as a negative incentive to make sure buyers that can pay the full price now, to not go for a long-term purchase.


thats what I thought.. tnx to clarify.. seems some folk did not quite get how that works.. well..i dont blame em..its bit tricky.
 

70ym

Established Member
Impact
182
Keep in mind that Dan sellers get 15% more revenue due to our markup model.

When you sell a domain for $10k in 60 installments, the seller actually get's a commission-free transaction paid for by the buyer because 15% markup is given to the seller as an incentive to offer long-term payment plans of up to 60 months. This model automatically increases the BIN price that the seller gets from $10,000 to $11,500.

Check out this blog post with more information about the psychology and success factor behind our unique LTO model: https://blog.undeveloped.com/introducing-domain-financing-2-0-cd82edbb79c4

The markup even functions as a negative incentive to make sure buyers that can pay the full price now, to not go for a long-term purchase.
I think it is better to allow seller to set the markup ratio.
For example:
2 months = 5% markup
6 months = 9% markup
12 months= 15% markup
 

nononsense123

Established Member
Impact
772
Escrow.com's domain name holding service transactions have a term minimum of three months and a maximum of five years. Happy to discuss with you in detail if you have any more questions via DM here or through [email protected].
Why don't you guys get in the landing page business?
Your name doesn't even need introduction
 
Impact
728
Keep in mind that Dan sellers get 15% more revenue due to our markup model.

When you sell a domain for $10k in 60 installments, the seller actually get's a commission-free transaction paid for by the buyer because 15% markup is given to the seller as an incentive to offer long-term payment plans of up to 60 months. This model automatically increases the BIN price that the seller gets from $10,000 to $11,500.

Check out this blog post with more information about the psychology and success factor behind our unique LTO model: https://blog.undeveloped.com/introducing-domain-financing-2-0-cd82edbb79c4

The markup even functions as a negative incentive to make sure buyers that can pay the full price now, to not go for a long-term purchase.

Thanks for the detailed reply.

I definitely understand the logic and agree with the psychology.

There is a conflict though because as a business Dan.com would prefer the buyer to choose a payment plan, because that vastly increases your revenue per domain. The psychology element may be true but that will always be counterbalanced by your goal as a business to activate more payment plans.

I do think it's a good service and very innovative, I'm just trying to surface the fact that a huge chunk of your revenue must be coming from installment payments.

Hopefully players like Escrow.com can up their game as suggested above to increase competition.
 
Top Bottom