Domain Marketplace 3% commission?

[Sirbigman]

Hi NP,

Me and my team are thinking of getting a new domain marketplace (ie. Undeveloped, Brandbucket, Brandpa) which would work in the favour of the seller and buyer by charging a small fee of 3% per sale with escrow fees included. The marketplace would be very simple but effective, user account for buyers and sellers, auctions and websites for sale. To keep the scammers away we would verify each seller and a monthly fee of $30 would be required. My company would use those money to advertise the website in Google AdWords.

The golden question is, would you sign up for something like that?

 

[Sirbigman]

Well, if I google "domains for sales" at this moment, Sedo is actually the very first organic SEO that comes up, under the four Ads.

Sedo has a very strong backlink profile and it would be futile to compete in organic search.

 

[Sirbigman]

You have ambition, but i don't think anyone will pay $30 to someone who will use it to promote the marketplace. Remember, it's the Marketplace which will get the traffic not the domain itself. The person who pays $30 isn't promised any sale plus it's monthly, which will not be acceptable by many.

Better, get the concept and project running. Get an outside investor to fund your project. Maybe register it as LLC and get funds from market. Promote it and get steady traffic, ask for domain sellers to pay one time listing fee. Get the business rolling. You can even ask for 10% commission on successful sales. People don't mind paying 10%-30% commission when a sale happens.

Very often "free" doesn't pay off. Rest assured, I'm using the feedback collected here. Thank you for taking the time to analyse this.

 

[SuperBrander]

Paying a commission when a sale occurs (money taken from you only if there's profit in it for you) makes much more sense than a mandatory monthly fee (money taken from you on a monthly basis regardless of the outcome). I think you'll find it very difficult to attract customers with your current model.

 

[Vimal Kumar]

Here is an idea for you...

• Write a WhitePaper
• Do marketing, ..more marketing
• Pre-ICO
• ICO
• Build
• Deploy

It could be a first for Domain Marketplace

All the Best!

 

[poweredbyme]

If crypto currencies (bitcoin and altcoins) will become the only payment-payout method, 3% brings you and your users very good profits. You won't need to charge monthly fee, even 2% is enough. Plus, you will not need to worry about scammers as bitcoin payments are irreversible. If you develop such a marketplace I will sign up right away.

 

[DBurn]

We set up Domain Burn about 6 months ago - tried a small listing fee (was only $2 per domain to list for the first 3 months) and a 5% commission on sales - including acting as agent (kind of like an escrow) to assist with the domain name transfer and payments.

We had about 5 users list domains, a few sold, but it never gained enough traction to have some capital to begin advertising. Tried a PR campaign, but decided not to put more $ into the business.

Recently changed all of the remaining domains to BIN prices and put the website up for sale - don't have a buyer yet.

 

[premkumar]

Simple go for 5% or 6% commission rather than $30 per month. That may make domainers to try your service

 

[karmaco]

Most domainers will not pay $30 a month for something they can do for free or much less. Rather pay the 15% when I do have a sale or use Efty for way less.

 

[Sirbigman]

If crypto currencies (bitcoin and altcoins) will become the only payment-payout method, 3% brings you and your users very good profits. You won't need to charge monthly fee, even 2% is enough. Plus, you will not need to worry about scammers as bitcoin payments are irreversible. If you develop such a marketplace I will sign up right away.

A marketplace powered by cryptos? Sounds promising, XRP, for example, takes seconds to reach your account. It's a good idea, not sure how it would perform on a large scale though.

 

[Sirbigman]

We set up Domain Burn about 6 months ago - tried a small listing fee (was only $2 per domain to list for the first 3 months) and a 5% commission on sales - including acting as agent (kind of like an escrow) to assist with the domain name transfer and payments.

We had about 5 users list domains, a few sold, but it never gained enough traction to have some capital to begin advertising. Tried a PR campaign, but decided not to put more $ into the business.

Recently changed all of the remaining domains to BIN prices and put the website up for sale - don't have a buyer yet.

The software seems laggy. What are you using? I'm thinking of running everything on Magento which is secure and fast.

 

[deez007]

If you where to have a results based monthly membership then that could work...

For example, you charge $50 membership ONLY if the seller has reached a minimum cap of $1000 in monthly sales. So if the seller doesn't make at least $1000 in sales for the month then they don't pay a membership fee. If they do make the $1000 threshold then they pay the membership fee.

So essentially, you would need to add enough value in terms of traffic generation to ensure that your members are making a minimum threshold of $1000 in sales.

 

[frank-germany]

We set up Domain Burn about 6 months ago - tried a small listing fee (was only $2 per domain to list for the first 3 months) and a 5% commission on sales - including acting as agent (kind of like an escrow) to assist with the domain name transfer and payments.

We had about 5 users list domains, a few sold, but it never gained enough traction to have some capital to begin advertising. Tried a PR campaign, but decided not to put more $ into the business.

Recently changed all of the remaining domains to BIN prices and put the website up for sale - don't have a buyer yet.

maybe you won't want to name it "domain burn" next time

 

[frank-germany]

If you where to have a results based monthly membership then that could work...

For example, you charge $50 membership ONLY if the seller has reached a minimum cap of $1000 in monthly sales. So if the seller doesn't make at least $1000 in sales for the month then they don't pay a membership fee. If they do make the $1000 threshold then they pay the membership fee.

So essentially, you would need to add enough value in terms of traffic generation to ensure that your members are making a minimum threshold of $1000 in sales.

great idea
but that won't happen

 

[golan]

The craziest idea i've heard lately. Also i gave you dislike for misleading thread title, you really should add "$30 monthly" to it.

 

[BarryDavis]

I will try to explain why I wouldn't do it. I own 100 names. If I were to put them up for sale with you I'd have to pay you $3000 per month. If I paid an average price of $100 per domain and was trying to sell them for $1000 each. If I sold 10 names the first month. I would owe you $300 in commission also. Your total fee would be a total of $3,300 on $10,000 of sales. That is 33% commission. And 90% of the cost is upfront.

If I didn't sell a name the first month I wouldn't have to pay you a commission but I'd still be out $3,000. And honestly this is what I think would be the result.

But lets say it took 3 months to sell 10 names my cost to you would be roughly $9,000. That is 100% of my profit.

You're probably saying don't list 100 names just list 1 name. Fine. So 100 of us list 1 name on your site. We each pay $30 per month. For the 10 people that sell our name we make a profit. If I sold my name in 3 months for $1000 your fee would be $30 per month times 3 = $90 + $30 (3% commission) total cost $120. That is still 12%. 90% of the sellers would still be trying to sell their name. They'd be out $90 and be looking at paying $30 per month for the unforeseeable future.

I'd rather not pay an upfront fee and pay a 15% commission to a reputable established company when the name sells.

 

[poweredbyme]

A marketplace powered by cryptos? Sounds promising, XRP, for example, takes seconds to reach your account. It's a good idea, not sure how it would perform on a large scale though.

You will need to hire coders to automate escrow process. If you wish you can offer variety of crypto currencies not only XRP. Top 5-10 cryptos should be enough, other cryptos don't have a large user base. Seller can convert altcoins to BTC easily, there are many providers who exchange crypto to crypto.

You will take crypto from buyer, will hold it until domain is transferred, and will send the crypto to seller's wallet. How difficult could it be ? It's easier and faster than receiving wire and credit card payments to your bank account.

 

[DBurn]

Domain Burn runs on a Wordpress site - so it may be a little slow for those that don't have fast connections. I also have it on just a basic hosting plan - was planning on upgrading once it got some traction ... but that's now not happening.

 

[namelancer]

Now, I list the same domain at your marketplace and it gets sold for $1000 in 16 months. I paid regfee + 1 year renewal + your commission (3%) + $30/mo listing fees, which you will use for advertisements.

So my total investment comes to - $30 (your commission) + $30*16 months ($480) + domain reg+renewal - $25 = $535. I get a profit of $465 approx.

''There are lies, damned lies and statistics''. Mark Twain

Your calculation is based on an assumption of a seller having a domain portfolion of only 1 domain, for which a monthly fee of 30 usd per seller/domain is extracted.

If you'd instead make projections taking into account an average size of a domain portfolio of, let's say 100 domains, with a monthly fee due to be paid per seller (not per domain) the resulting netto would lean less in the direction of a negative bias.

 

[namelancer]

I will try to explain why I wouldn't do it. I own 100 names. If I were to put them up for sale with you I'd have to pay you $3000 per month.

I may have missed the mention of it in the text, but could you please refer to the exact location in the thread where it says the 30 usd fee is to be paid per domain rather than per seller irrespective of the number of domains ?

 

[BrandMart]

I may have missed the mention of it in the text, but could you please refer to the exact location in the thread where it says the 30 usd fee is to be paid per domain rather than per seller ?

Can you point us to a location where he said $30/month for unlimited domain listings?

 

[namelancer]

Can you point us to a location where he said $30/month for unlimited domain listings?

Sure:

To keep the scammers away we would verify each seller and a monthly fee of $30 would be required.

 

[imadoer]

This is complete dumbness no one is going to pay you 30 bucks a month and a percentage % your insane

 

[BrandMart]

i can't promise you that, however I can refer you to the text where a monthly fee is mentioned in a somewhat unspecified manner. So, without jumping to conclusions, perhaps it's best we seek clarification from the OP himself before we start painting the idea of a domain marketplace in Armageddon colors.

It's good that you are defending his cause. His idea is noble, but details wayward. Did you go thru the replies in this thread or just replied to what you saw on page 3?

See below?

Your approach is not how it should be. If you are going to start a Domain Marketplace, start it, lay a plan and come here to advertise. If you ask fellow domainers, to signup once done, most will say no, since they already are all over the place and finding it hard to crack a sale.

What makes your marketplace unique? What section of buyers are you targeting?

Asking to join vs proposing a business plan with opportunities and offers for both sellers and buyers are 2 different things.

I made my point there. What's unique in your business model? What's his answer? see below.

This is market research basically but in a friendly way not in an annoying survey filling way. How would this be unique? It wouldn't be based on greed, first of all, you would already support the project by paying your monthly fee, the development would go on, we would advertise to right audience by conducting an extensive keyword research. Everyone would reach the front page at random, it would be easy to use and friendly.

Did he mention that the monthly fee is not per domain but per account and an account can list unlimited domains within that monthly fee?

Had the OP made it clear in his business model,which i stressed on in my posts in this thread, the confusion would not be there and we won't be having this discussion.

So - ''There are lies, damned lies and statistics''. Mark Twain!

 

[namelancer]

It's good that you are defending his cause. His idea is noble, but details wayward. Did you go thru the replies in this thread or just replied to what you saw on page 3?

@BrandMart, you quoted my reply before it was edited by me in light of finding more supporting evidence that the 30 usd fee is charged per seller and not per domain:

As much as I would like to give everything for free, the costs of advertising can be quite high, I'm thinking 100 members per month, $3k in advertising budget, it would really help with exposure.

 

[MapleDots]

So, a person will pay you $30/mo + 3% so he can list his domain and sell on your portal? A seller pays commission only on sale.

Lets do this via an example.
I have a domain - xyzabc.com, I list it on SEDO, it gets sold for $1000 in 16 months, I paid regfee + 1 year renewal + SEDO commission (10% - 20%, see https://sedo.com/us/what-we-offer/price-list-for-services/)

that makes sedo commission of around $100-$200 max. So total investment $200 (max commission) + domain reg+renewal - $25= $225. I get a profit of $775 approx.

Now, I list the same domain at your marketplace and it gets sold for $1000 in 16 months. I paid regfee + 1 year renewal + your commission (3%) + $30/mo listing fees, which you will use for advertisements.

So my total investment comes to - $30 (your commission) + $30*16 months ($480) + domain reg+renewal - $25 = $535. I get a profit of $465 approx.

So which marketplace gives me more exposure and profit? Yours or SEDO / Afternic etc?

Absolutely a valid point

However...

The monthly charge is for the whole portfolio and your calculation is based on one domain.

At least I would hope that is the case because on a thousand domains the costs come down exponentially.