Domain Name Prices: Why do some domains cost more?

During your domain name research or purchasing journey, you may have noticed domain name prices can vary heavily between top-level domains (TLDs) and even other domain registration websites. Why do some domains cost more than others? It’s a common question, and there are numerous factors that determine the price of a domain name. The factors that can impact the price of a domain name include: the registrar used, that registrar’s expenses and fees, the registry, the type of domain name (regular vs. premium), the TLD itself, and the registrant’s objective (registration, transfer, or renewal). There are a lot of factors!

In this article, we’ll cover these various components in more detail so you have an understanding of how and why domain prices are set the way they are - starting with understanding registries and registrars.
 

The Registry

To start, the wholesale cost of domain names are determined by domain registries, which means that they set the base amount registrars must pay when a domain is registered. If you don't know, domain registries are organizations that own and manage specific TLD databases, and work with domain registrars (like Dynadot) to provide us with the ability to register domains for their TLDs. Some examples of registries include: Verisign (for .com and .net), PIR (for .org), and Donuts Inc. (who own over 200 TLDs). There are many different registries and each is responsible for defining that base level cost of a domain name (the wholesale price) which is important to domain registrars (who decide the sale cost, which we'll cover further in the article). 

There are situations where the wholesale price is negotiated between the registry and the Internet Corporation for Assigned Names and Numbers (ICANN), who are regulators in the domain name space. A majority of registries do not need to go through this regulation/negotiation process but some do (such as .com). 

Before we go into registrars, let’s first talk about TLDs and how they can play a role in registries pricing domains.
 

TLDs

Every TLD is unique - each with its own audience, category/niche it may fit into, and appeal. Every domain extension also has a market that aligns with it, which could be very broad (such as .com representing a more ‘catch-all’ TLD option) or narrow (such as .auto for businesses in the automotive industry). How does this impact the price of a domain? Well, since TLD uses widely vary, it is up to the registry to decide the wholesale price for registrars to work with.

Some registries want to make a specific TLD a luxury to own (such as .rich), and increasing the cost can help with that. This increase also means there is a higher likelihood that users will be able to register their desired name under that TLD (with higher prices, there are typically less registrations - which means more name availability), which can be attractive to potential buyers. On the other hand, some TLDs have an extremely low cost entrypoint which means getting a specific name may be challenging but they become more accessible to a wider audience. The registry ultimately decides what's best for their domain extensions and how they want to position them from a price perspective.

From a buyers perspective, these domain extensions often become tied to a brand’s online presence, which is why some are willing to spend more if it fits how they want to represent themselves. For these reasons, the TLDs themselves often contribute to why some domains can be more expensive. 
 

The Registrar

The domain registrar plays an important role in determining why some domains cost more than others. As mentioned, the registry is responsible for providing the wholesale price to the registrar, and the registrar is then left to decide on the actual registration price for customers to pay. Just like other retailers in the world, there is markup added to that wholesale price so that a profit can be made. With that said, this markup is also used to cover expenses, which every registrar has. This can include a range of business expenses such as: employee/office costs, employee benefits, and other general business expenses which can all play a factor in determining the price of domain names. To add to these business expenses, each registrar has to pay fees whenever they register domains for a customer, which also contributes to the final price.

The amount of profit per domain registration varies from registrar to registrar. Some registrars focus on higher prices to earn more, or create upselling/product add-on strategies to help cover expenses and fees. At Dynadot, we focus on a low-price, upselling-free checkout process, providing you with all the domain tools you need to securely manage your domains at an affordable cost. 
 

Registration Sales and Renewals

One important factor that comes into play when pricing domain names is the user objective - specifically, first time registration. Some registrars try to entice users to register domains through deep sales and, in the domain industry, that could include taking a loss of money on the initial sale. This is often seen with $0.99 .com domain registration sales (when they currently have a wholesale value of $8.39 for a one year registration). However, in these scenarios, the domain renewal prices are commonly increased and that renewal becomes mandatory, helping the registrar recoup lost profit for the initial sale. The previously mentioned upselling and add-ons for purchases can also help with these profit-loss sales. 
 

Domain Names: Regular vs. Premium

Lastly, there are two types of domains - regular domains and premium domains, both which have drastically different prices regardless of where you look.

Premium domain names are valuable domains identified by the domain registry and have a much higher registration price compared to normal domains. This is due to the registry identifying these domains as higher value (thus, premium) due to either expected popularity or having criteria they deem as ideal for a great domain (such as a short number of characters or popular words). Some domain names for sale by other users are also referred to as premium domain names as well.

On the other hand, regular domains are all non-premium domain names, meaning that they are the standard price set by the registrar.
 

As you can tell, there are many factors that come into play when it comes to the price of a specific domain extension. Between the registry setting the wholesale price, the registrar setting their sales prices with expenses in mind, and premium vs. regular domains, prices can have a lot of variance. At Dynadot, we try to keep our prices as low as possible with no upselling or add-ons and no increased renewal fees to get you to register with us. Check out our list of TLD prices for more information.