Flippa Increases Their Success Fees by 400%

Flippa just came out with a new set of rules and adjustments for buying and selling web sites on their marketplace. You can read the full page, which is a bit lengthy, or you can read the recap I’ve put together below.

While some people will probably be angered by the price changes, it’s really all just part of the business. For anyone who pays attention to the stock market and has been keeping an eye on NetFlix, the stock has tumbled from $300 a share to $70 a share, since they made a price adjustment to their rental/dvd membership service. I don’t think the changes at Flippa will hurt their business model in the slightest, as they have established themselves as “the player” when it comes to buying and selling web sites, and the new changes will really only effect higher end sales in the $10k+ range. Additionally, the buyers of web sites will not be affected by these changes, as they are mainly listing and feature changes.

Change to Featured Listing Pricing

One of the most attractive features on Flippa when listing a web site, is to go for the main page listing. This cost was previously $40, and now increased to $50 (a 25% increase). This can be looked at in a good and bay way… good because less people may use this feature, which means your listing will stay on the main page longer, and bad because it’s an extra $10 more.

Change to Privacy Upgrades

Outside of buying and selling web sites, Flippa is an amazing resource for information. One a web site is listed and sells, it’s on the web site forever for others to view. That is of course unless you pay an upgrade fee to have the auction listed blocked from search results, removed after the auction ends, or requires a confidentiality agreement.

Flippa has lowered the price for removing auctions after they end from the web site from $100 to $30. To take advantage of this feature, you would select the “Hide Listing from Public View” option during the upgrades process. While the decrease is nice, I think this is one of the least used upgrade features.

Change to the Success Fee Cap

Lastly, we get to the success fee cap and that’s where the majority of price changes have been made. Flippa wants to stress that they are “not changing the success fee”, but instead changing the success fee cap to $2,000, from the original $500 that was in place. When a web site sells, Flippa gets a 5% success fee, which is where they make a profit. Since more web sites are selling on Flippa for over $10,000 it’s only fitting they would put this change in place.

For example, a web site sells on Flippa for $10,000 (Flippa gets a $500 success fee). Under the old plan it didn’t matter if a web site sold for $10,000 or $1,000,000… that success fee would still be $500 for Flippa. With the new change in place, that success fee is now capped at $2,000 instead of $500. If a web site sells for $40,000 or over, you would then have a $2,000 success fee.

Let’s see how this works under a few different scenarios. (From Flippa)

1. Website sells for $80 – no change as the minimum success fee remains unchanged at $5.
2. Website sells for $8,000 – no change as the existing 5% success fee of $400 is applied
3. Website sells for $18,000 – this is beyond the previous cap and the 5% success fee of $900 is applied
4. Website sells for $80,000 – this is beyond the new cap so a success fee of $2,000 is applied (ie NOT 5%)

In the end, the price increase is fractional, especially for large web sites. I’m surprised something like this wasn’t put in place earlier, but it makes sense to establish yourself as the premier marketplace for buying and selling web sites before making any big changes. The bigger question is if Flippa will continue to make changes to their web site and if more price changes are coming.

The comments over at Flippa are going both ways, some happy and some angry. In the end, Flippa is still the best place to buy and sell web sites, and unless you are selling sites for over $10,000, nothing is really changing anyway.

If you’d like to learn how to make the most money when buying and selling web site through Flippa, be sure to check out my 140+ page book called “Flip This Web Site”, which also includes bonus videos, case studies, mini niche guides and more.