If you are a domain investor, you certainly have many options when selling your names.
The lowest cost option is to try to sell the name directly from your own website or landing page. This way, you can avoid paying any commissions to third party marketplaces when the name sells.
However the biggest challenge for many domain sellers is attracting the right buyers and end users who might be interested in the name. This is especially the case when it comes to the Brandable category.
Squadhelp commission rates vary from 35% to 15% depending upon the selling price of the domain name. On the surface, this may seem like a high commission rate. When comparing our commission to other Marketplaces, it is important to compare all the factors.
1. Listing Fees
Some Marketplaces charge up to $10 to list your domain for sale. So if you have a Portfolio of 100 published domains, you might end up investing $1000 upfront - with no guarantee that any of the names will sell.
Some Marketplaces do not charge a listing fee, but may charge an initial submission/appraisal fee of $1 for all submitted domains. (So if you submit 10 domains, and 2 get accepted, you are effectively paying $5 per published domain)
We, at Squadhelp, strongly believe that the incentives of a Marketplace must directly align with the incentives of a seller. If we are unable to sell your names, we should make no money, period.
If a Marketplace is charging a listing fee, you have to consider whether their incentives are directly aligned with yours. Revenues from Listing Fees might create an incentive for the marketplace to start accepting subpar submissions - which can lead to flooding of too many names in the marketplace, making it even harder to sell your domains.
2. Logo Design Fees
Some Marketplaces charge a fee to design a Logo for the names listed in their Marketplace. In some cases, the fees are payable when the name sells, and can be typically $100 to $200. Squadhelp does not charge ANY fees for designing a Logo. In addition, for several domains, Squadhelp also designs a complimentary Lifestyle Image to accompany the Logo.
In the above example, if SH invests in designing Logos for your 100 names, and none of them sell, SH not only makes 0 money from the listing fee, we actually lose money due to the upfront investment to create 100 Logo designs. Again, this goes to our philosophy of directly aligning our incentives with sellers.
3. Marketing Investment
Squadhelp makes substantially higher Marketing Investment compared to other brandable Marketplaces. This is the reason why we have over 20,000 customers from well funded startups to large Fortune 500 companies such as Nestle and Dell.
Our contest based format makes it even easier to pitch your relevant domains to thousands of end users.
To get more information about relative marketing investment as well as traffic, you can refer to third party websites such as SimilarWeb which track this information across various companies.
4. Sell Through Rate
None of the commission percentages matter if you are not able to sell your names. As of March 2019, the 12 month Sell-through rate from Squadhelp premium domain Marketplace is above 20%. The 6 month sell through rate is above 9%.
In other words, for anyone who has listed their names with SH for over 12 months, they were able to sell over 20% of their portfolio on average. Based upon our research, this is currently the highest sell through across the industry.
To be fair, this sell through rate might decrease over time as we expand our Marketplace. However given our highly curated focus in Domain acceptance, as well as our high level of marketing investment, our goal is to continue to offer the best sell through rate across the industry.
Despite the current high sell through rate for SH, we have assumed a significantly reduced sell through rate in the examples below to show a more conservative comparison.
Here are some examples to better understand SH Commissions.
Let's say you have a portfolio of 100 Domains, Average selling price of $2000. The average commission charged by SH in this scenario would be $32.5%.
Let's compare this to another marketplace, and assume you pay $5 in listing fees (and in return you receive 30% Commission).
After accounting for all the fees, your effective commission rate with the other marketplace ends up becoming 37.5% in this scenario.
See illustration below:
Now let's change the average selling price of the same portfolio to $1500. The average commission charged by SH in this scenario would be 35%.
Let's continue to assume you pay $5 listing fees in the other Marketplace (and in return you receive 30% Commission).
After accounting for all the fees, your effective commission rate with the other marketplace now ends up becoming 40% in this scenario. See illustration below:
Let's now keep the same assumptions as previous example, but assume a higher sell through rate of 10% at SH and 5% at the other Marketplace.
After accounting for all the fees, your effective commission rate with the other marketplace now ends up becoming 43.3% in this scenario. See illustration below:
Now let's consider an example with higher priced domains. Let's say the average listed price of your portfolio was $5000. In this case SH actually charges a lower commission of 25%.
Assuming the same sell through rate of 5%, your effective commission rate with the other marketplace now ends up becoming 34% , compared to 25% for Squadhelp. See illustration below:
While it may be easy to compare just the commission % across all marketplaces, you must factor in all expected fees, as well as expected sell through% to get a complete understanding of the actual costs involved in selling your domains.
The above examples are merely just a few illustrations of many different possibilities, and we recommend incorporating your own assumptions in a model such as above to determine what option works the best in your situation.