Stealth mode price increase by Flippa impacts profitability for small business sellers, and shoppers!
Seller’s on Flippa received a November surprise by means of a significant price increase for listings on the popular website auction platform. In a stealth-like move, Flippa increased prices by $10 USD for a “Standard Listing” below an asking price of $999, with no notice to customers. Other listing fees were also increased in all price-point options.
Seller’s noticed the price increase only when placing a listing for sale, a source told us. The increase brings into question the value of continued use of the service for smaller business opportunities with lower price-points and reasonable cost of entry for start-up and small business websites.
In a blog post on Flippa entitled “Transparent Pricing”, Head of Customer Support & Experience, Chris Stephenson, stated,
"We continue to build for our community and have added new services and even more value to our platform. Accordingly, we have reviewed Flippa’s pricing offerings to ensure our offering remains the most efficient pathway to sell and exit for a digital asset for online business owners globally."
(Updated 11/15/22)
The listing fees on Flippa are structured by the asking price of the website being sold. Listing fees have been updated on the company website and can be reviewed here.
Flippa is a very popular website auction platform. This is especially true for budding entrepreneurs looking to purchase low-cost websites to grow into profitable income sources. You will find hundreds of these types of listings on Flippa. For example, niche websites for drop shipping, blogging platforms, affiliate commissions, and many more. These websites often sell on Flippa in the $200 to $800 price range. We’ve spotted several sellers on Flippa that have sold well over $100K, and some over $200K of websites within this price range.
For many of these sellers, the question now becomes “is Flippa worth it in 2022 and beyond ?” Or, “how do I make a decent profit margin within this price point going forward?”
Both are great questions!
Let’s put this into perspective and examine a real-world example of how the Flippa price increase negatively impacts loyal sellers on its platform. Here’s a simple example using existing listings on Flippa.
Here’s a link to a Flippa “Super Seller”
At the time of this blog post, this Flippa seller has completed over 600 transactions valued at over $80K. The average price for these listings is currently a very reasonable $117. The sites are beautifully designed and definitely worth the value in our opinion.
With Flippa business model, and recent price increase, here’s the math using the average “asking price” of $117 for each domain/website on this seller’s public profile.
Selling Price: $117
Flippa Standard Listing - $39
Standard listing brings your business to over 300k buyers globally representing over $70bn of buyer wallet.
Flippa "Success Fee" - $12
10% Success Fee is charge for the total amount of the sold listing.
Domain Cost - "$10"
Let's not forget, the seller had to purchase the domain before building the website and listing it for sale on Flippa. We'll use a reasonable estimate of $10.
Merchant Fees - "4.5%"
Flippa has agreement with Escrow.com. However, most of the smaller transactions are processed via PayPal. We'll use a reasonable fee structure from support pages on PayPal to calculate the transaction fee. - $5.27
Total Cost to Seller - $66.27
Therefore, to sell a website on Flippa in this price range, it will cost you $66. This does not take into account the time of building the site, communicating with your Flippa buyer, and oftentimes transferring/installing the site to your buyer's hosting platform.
Net Revenue to Seller: $50.73
PRICE INCREASE BY FLIPPA
CONTINUED:
The question for Flippa Sellers becomes “is it worth the trouble to continue doing business on the platform?”. Even the so-called “Super Sellers” can’t continue to do business with Flippa at these rates.
At this point, you’re just giving money away and the rewards continue to get smaller and smaller for all the time and effort. Look at this another way. Even if Flippa is a secondary source of income and is being used as a lead source to build a list of buyers, you would need to sell eleven (11) websites a week to earn $600 a week. Oh, and don’t forget, those eleven leads just cost you $66 USD each, plus all the headaches.
Look, we get it. Every business, including Flippa, has to turn a profit. However, in my opinion, Flippa is quietly working to eliminate these low-priced auctions all together. There are a lot of issues Flippa has to deal with in these types of auctions. Many of the buyers for these low-cost auctions are “newbies” and often dispute a sale, or never pay. Flippa employees then have to manage charge-backs, re-listings, etc. I’m sure it’s a pain in the ass and Flippa would much rather be reeling in the big fish. It makes sense. However, driving away Flippa Sellers in this manner will only end up creating competition in a robust manner. Perhaps that would be a good outcome as a result of these rediculous rate hikes.
As the global economy continues its meltdown, more and more people will be looking for digital opportunities to supplement their income. Flippa is a great place to find those opportunities. However, Sellers are being forced to raise their prices and buyers are either going to open their wallets to these offers or look elsewhere.