At the Webfest conference in Los Angeles, one of the recurring themes that I encountered was the topic of Domain Name Leasing as alternative monetization strategy for domain holders. At Epik we have long believed in the power of leasing domains and have some transactional experience and operating competency in this area. Domain Leasing was Epik’s 3rd largest source of revenue in Q4 2012. We could not be more enthusiastic about the future of Domain Leasing.
Why Domain Leasing?
Simply put, New Economic Realities requires New Economic Models. More businesses are being bootstrapped and financed with less available at-risk capital. As a result, the margin for error is smaller. The majority of prospective domain buyers view a 4, 5 or 6 figure domain purchase as a material decision. Leasing is a way to reduce risk, and leave more startup capital to fund operations while still building on a superior domain name.
In our experience, most customers who do lease a domain, eventually buy the domain. It is purely a question of cash flow planning. While discounting is one option, we prefer to lease. One the big challenges of domain leasing is managing the cost-benefit equation. For most Domain Owners, a $10/month leasing transaction is not worth the trouble. However, when that process is fully automated, the cost-benefit become compelling. Automating and streamlining the leasing process is exactly what we have done at Epik. And it is definitely working.
How we do it at Epik
At Epik, all of our leases are managed through the Epik Marketplace. Customers come to a landing page for a domain name or website listing. Most listings have a purchase price, but can optionally have a leasing price.
As a general guide, we tend to set leasing at 1.1% of the purchase price with a minimum amount of $10. That being said, there is no rule that says that lower or higher numbers will not work. For example, a parked domain with established or traffic or revenue should command a higher lease price.
Visitors to the Epik Marketplace can select their preferred currency. If the customer chooses Leasing, they are walked through a checkout process which sets up repeat billing during the leasing term. The domain owner (Lessor) is notified of their transaction and the new leasing customer (Lessee) receives an email confirmation of their lease.
Once the lease is completed, the domain is managed in the Epik account of the Lessee, while the Lessor retains registrar ownership. Epik manages the rebilling, with 100% of the leasing proceeds deposited into the Lessor’s account. If the Lessee fails to make a Lease payment, the Lease is terminated
Some Illustrative Case Studies
Readers of this blog love case studies. Here are a few recent leasing examples that illustrate the model. They are just a few examples taken from Epik’s owned and operated portfolio for recently completed leases.
Carpool.com – a larger transaction: The client leased this domain for $20,000 per quarter. As part of the leasing agreement, they also secured the right to purchase the domain for a multi-six figure $ purchase price. After leasing the domain for 2 quarters in 2012, the lessee elected to exercise the purchase option and is now the owner of this premium domain name as of January 2013. During the leasing period, Epik provided registrar support.
WalkNTalk.com – an upsell made possible by leasing: After receiving an unsolicited inquiry about this domain, we contacted someone with a similar domain to gauge their interest in making a competing offer. It turns out that the contact wanted the domain badly but could not meet the $6500 list price. As a result, they leased the domain for $65/month and now have an active option to purchase the domain for $6500 which they intend to do later this year.
eCannabis.com – a simple lease to own transaction: A buyer visited the Epik marketplace and made an unsolicited lease of the domain at $65/month. They now have the ongoing purchase option at $6500. Depending on the changes in cannabis legislation in the US, this option could well turn out to have been a brilliant move by the leasing customer who secured the option.
In addition, we do many leases in the $10-30 range per month. While this is not much, these leases now make considerably more than they did parking, and amply cover their holding costs. In the meantime, the lessees are in most cases adding value to the domains via development. And again, most domain leases do end in domain sales, particularly leases priced at greater than $30 per month. The higher the leasing price, the greater the skin in the game for the Lessee.
Epik is not the first company to invent leasing of domains. However, we are among the first companies to create and manage a domain leasing platform that actually works. In addition, we believe we are the first to integrate domain leasing with a real-time registrar escrow that protects all parties in the leasing transaction.
– Automated Lease Management: When Epik integrated registrar management starting in 2011, we also significantly increased our development capacity for adding new functionality. Following some early success in leasing, we set about to develop a leasing process that could scale, automating whatever processes could be automated while at all times protecting the interests of all stakeholders in the leasing transaction. Leasing is literally as easy as Parking.
– Leasing platform protects both the lessor and lessee: Epik is the neutral third party that sits between the Lessor and Lessee. During the Lease period, the Lessor cannot transfer or sell the domain/website to another party. Similar the Lessee can only use the domain but cannot see or change the WHOIS or authorization code. As a result, even privacy-protected domains can be leased on Epik.
– Integrated Reporting of Stats in the Marketplace: A leasing customer may be interested in knowing the current site statistics. To make this painless and transparent, our marketplace displays statistics that are updated daily. Parking data is automatically retrieved from popular parking services like Voodoo, DomainPower, Rook and Bodis. We plan to add more as these companies expose their customer performance data via API (Helloooo Frank Schilling).
– Ongoing support for Lessee: During the lease period, Epik provides full service customer support to the lessee. Post-transaction, the domain owner is not bothered with ongoing requests for using the domain name, e.g. changing DNS, setting host records, or activated hosting services or cloud services like Google Apps, etc.. This makes leasing scalable, even for smaller transaction amounts.
– Commission free and even Tax free Transactions: Epik operates the only Domain Marketplace in the industry where customers can sell or lease domains commission-free and even tax-free. How do we do it? Our patent-pending process allows domain sales to be settled in “Masterbucks”. Use your sale or leasing proceeds to register, renew or transfer domains, or any other service that Epik offers. Alternatively, you can simply cash out — there is a 5% cash out fee to cover payment processing costs. Either way, it is an unbeatable offer from Epik.
Leasing Domains and Websites on Epik
Domain Leasing on Epik is easy.
To protect the interests of Lessor and Lessee, we require that the domain is registered at Epik. For those who are not aware, Epik is an ICANN accredited registrar now serving more than 50,000 customers. We are a full service registrar, largely serving end users. For professional domain investors, we offer very competitive pricing, with $8.34 for transfers for everyone, and with renewals as low as $8.03 for .COM. All registrations come with a fantastic array of free services included at no additional cost, including free privacy, free email forwarding, and free WordPress hosting.
Once your domain is registered on Epik, simply hover over the domain you want to lease or sell, and then set the terms for sale or leasing of your domain or website from the Manage menu for the domain.
You can also set pricing in bulk using the Domain Manager. If you need assistance with setting up leases for your domains, simply contact our support team anytime 24/7 and we’ll be happy to assist.