Where does my registration fee go?

Domain name prices have plummeted in recent years. When domain names first became available to the public back in 1995, they cost $70 for a two-year registration. Since then the average price paid for a domain name has steadily declined. These days paying more than $10 a year is considered expensive.

In the last year or so, some hosting companies have started selling domain names for $3-$5 dollars a year. They lose money on each domain name, but make up the difference with customers that later buy hosting from them. Domain names become a "loss leader" for them.

There is always a catch when you buy a domain name (or anything) for below cost. Some of the common situations are:

-You can only buy a very limited number of domains at the below cost price. After that you pay regular price.

-You have to pay very high renewal fees.

-You have to buy hosting to get the low price.

-The below cost price is for a limited time only, after which the prices will increase.

-Only the first few hundred customers get the low price.

-Often the domain control panel is inferior, because most of these companies do not specialize in domain names.

-Remember, you get what you pay for, and there is no such thing as a free lunch, no matter what their marketing department tells you. Always read the fine print.

-You need to order over $10 in other services to quality for the less expensive domain name.

At $7.99 a domain we (Dynadot.com) offer one of the lowest prices in the industry. Furthermore, we specialize in domain names, and have top notch customer service and control panels as well. We believe in running an open and honest business - no catches, gotchas or gimmicks. What you see is what you get.

This list will show you the breakdown of a domain name registered at $7.99 for a dot com registration.

$6.00 registry fee paid to Verisign, the central registry
$0.50 credit card processing fee
$0.25 ICANN transaction fee
$?.?? Office rent, employee salary, advertising, government taxes, hosting fees, computer equipment, software, utilities, insurance, fraud, legal fees, etc.


As you can see, registrars make less than $1 profit for each domain name we register. $7.99 for a .com is just about the lowest I have seen, if you're paying anything cheaper it may be because you are sacrificing service for cost. You be the judge.

Portions of this entry were taken from Dynadot.com.