The Cost of becoming a .COM Domain Registrar

How can this be financially feasible for anyone?!?

I’ve apparently had an incorrect view on the exact schema and costs of how domain registration works. I had always assumed that to become a registrar (the companies that normal people register domains through) of any .COM domain, you just had to get accredited by ICANN, and then pay $0.20 per domain. However, accreditation is an expensive and tough process, including (taken verbatim from the link):

• US$2,500 non-refundable application fee, to be submitted with application.
• US$4,000 yearly accreditation fee due upon approval and each year thereafter.
• Variable fee (quarterly) billed once you begin registering domain names or the first full quarter following your accreditation approval, whichever occurs first. This fee represents a portion of ICANN’s operating costs and, because it is divided among all registrars, the amount varies from quarter to quarter. Recently this fee has ranged from US$1,200 to S$2,000 per quarter.
• Transaction-based gTLD fee (quarterly). This fee is a flat fee (currently $0.20) charged for each new registration, renewal or transfer. This fee can be billed by the registrar separately on its invoice to the registrant, but is paid by the registrar to ICANN.
• Please refer to http://www.icann.org/general/financial.html for the most recent ICANN Budget to find additional details about invoicing, including options for relief.
• Please refer to http://www.icann.org/financials/payments.htm for instructions on how to submit payments to ICANN.

So I had thought that becoming an accredited .COM registrar would pay itself off in the first year if you had ~1,177 domains registered...

• BASE FIRST YEAR FEE=$2500 application + $4000 yearly + ~$1500 ICANN operation fee = $8000
• PER DOMAIN DIFFERENCE= $7.00 to register a domain at a good registrar - $0.20 ICANN FEE = $6.80 savings per domain
• TO BREAK EVEN= BASE FIRST YEAR FEE / PER DOMAIN DIFFERENCE = $8000 / $6.80 = ~1,177 domains

but unfortunately, I was incorrect in that you ALSO have to pay Verisign (who owns the .COM TLD) a hefty fee per domain.

So once you become an accredited ICANN register, you have to hook your system up to Verisign, who charges an additional (to the $0.20 ICANN fee) $6.42 per domain. Even worse is that they require you to pay all of their fees up front for the number of domains you plan to register on a yearly basis!!!!

Taking into account these new findings, it would actually take ~21,053 domains (with PER DOMAIN DIFFERENCE being adjusted to $7.00-$0.20-$6.42=$0.38) to break even the first year when becoming your own registrar (as opposed to going through another registrar), YIKES!

I've always personally recommend gkg.net as a registrar, but their registration prices recently took a major hike, like most registrars, due to Verisign raising their per domain fee. I may have to reevaluate registrars at some point because of this.

Domain system problems

Alas at insecure systems that are important to us all

I’ve been waiting to hear this kind of news for years: Domains May Disappear After Search. I’ve often told people for this kind of reason to watch where they are registering domains, as I believe some registrars like register.com are not very scrupulous and would do this exact kind of thing. I personally use GKG for all my domain registration needs, though they have recently ticked me off with a policy I recently ran into in which you can’t modify any information on a domain 6 months after renewing an expired domain with a credit card. Their tech support also isn’t very good, but they have fair prices and excellent domain management interfaces.

Another huge domain problem is “domain tasting” in which domains can be registered and then refunded within a five day grace period. Unethical people will use this to register expired domains and keep them if they get enough hits. After all, domains only really cost 25 cents to register if you are an accredited ICANN (Internet Corporation for Assigned Names and Numbers) registrar, which cost something like $3000 to obtain. This is a big problem if anyone lets their domain expire. Fortunately, some services, like GKG, give you a grace period to reregister your domain after it expires before others can try to claim it.