I’ve added the least to own (LTO) option on nearly all of the domain names I have listed for sale with BIN prices. LTO can make it easier for a buyer with a smaller budget to have access to a more valuable domain name. They can use the domain name to grow the business while paying it off. A seller can also benefit from a steady stream of income. It can be a win/win.
Platforms that offer LTO allow the seller to choose the length of time for the LTO. Sellers can generally choose anywhere from 2 months to 60 months, depending on the purchase price. Typically, I’ve been choosing 36-48 months, depending on the price point.
Atom.com Founder and CEO Darpan Munjal shared some insight that could be helpful to sellers in selecting the length of time they are willing to offer for LTO deals:
While longer payment plans can boost STR, they also carry a higher risk of cancellations.
Understanding this risk is crucial for finding the sweet spot between STR and realized revenue.
Based on our data, 48-month payment plans resulted in significantly higher cancellation… pic.twitter.com/tprXoyG00K
— Darpan (@darpanmunjal) May 26, 2024
Darpan later followed up to share that the data is from more than 10,000 LTO sales. He has been answering other questions about LTO length, so feel free to reach out on X if you have questions.
Having a LTO cancel after a buyer makes some payments is not the end of the world. The seller keeps all the money and has the domain name returned where it can be sold to someone else. Obviously, the more money collected in the interim, the better.
In looking at the data Darpan shared, I am going to consider shortening the length of time on the longer deals I offer. I will probably max it out at 36 months. I will need to figure out how to search by length of LTO and then do a bulk change. I might need to lean on an Account Manager for this.
I think it is taken lightly what a domain name is, which has always been real estate.
In the real estate market, the owner of a premises uses the leasing contract, the buyer pays a deposit on account of the total price of the sale agreed upon between seller and buyer, the latter can use the premises for his business and pay each month what was agreed upon to the seller.
In real estate, the seller can ensure that he will fully collect the monthly payments if the buyer does not pay with insurance.
What similarity exists, with the domain names on Lease in Atom, Afternic and Dan etc. None!
Domain name sold $150,000 I find it reasonable that the buyer wants to pay an amount each month and the seller will not raise any objection if the monthly payment is between 12 and 36 months, the amount each month is interesting.
Domain name sold $1500 I find it reasonable if the buyer wants to pay $500 every month in three months and I don’t find it reasonable for the seller to receive $125 every month in 12 months.
Not being able to use the domain name by the buyer with a website is one of the evils that buyers do not pay, if it were the other way around, part of the profits would be to pay the seller, with systems that exist with software .