The internet is an integral part of our lives, and at the heart of every website is a domain name. But have you ever wondered or even been frustrated at why domain names come with a price tag? This article will explore why domain names cost money and are not free.
What is a Domain Name?
A domain name is essentially the address of your website on the internet. It’s what users type into their browsers to access your site, like www.netcat.au and connects the user to your websites webserver allowing the site to be displayed.
Domain Registries
The primary reason domain names cost money and who sets the fees are the domain registries such as Verisign who own the ‘.com’, ‘.net’, ‘.cc’, ‘.name’ and ‘.edu’ who own the individual TLD’s (Top Level Domain).
The main responsibility of these registries are to maintaining an accurate database of all the domains registered for the namespace, provide a platform for registrars to register and renew domains as-well as ensuring the registered domains comply with regulations.
Registries can set the price for each domain name they wish to sell, some TLDS will be cheaper or more expensive than other. In some cases the registry may charge extra for a ‘Premium Domain’ which they define as more valuable, this may because the domain is short or a dictionary word.
An example of this can be found in the 2003 Verisign .COM Fee Schedule which states the fees to register, renew or transfer a ‘.COM’ domain will be $9.59.
It is important to note that domain names and associated fees are typically paid for in $USD. This can result in domain names becoming more expensive for local registrars based outside of the US due to currency exchange rates.
The Role Of The Domain Registrar & Providers
It is very rare for individuals to be able to directly register a domain with a registry, but rather register a domain through registrar. Registrars are companies accredited by ICANN (Internet Corporation for Assigned Names and Numbers) to sell domain names and directly interact with the various registries.
The registrar is responsible for providing the systems to allow customer to register domains, collect payment and handle customer support such as Domain Complaints. Many registrars offer additional value added products ontop of this such as DNS Hosting, Email Forwarding and Domain Privacy services.
Registrars will markup the cost of the domain purchased by the registry to cover these costs, how much depends on the individual registrar.
It is important to note that not every provider that sells domain names are a registrar due to the ICANN accreditation costing a significant amount of money and other expensive overheads. In many cases smaller providers which sell domains such as us (Netcat) will become a partner of larger registrar such as Synergy Wholesale. Like registrars, providers are able to set what-ever price they wish to sell a domain.
As different registrars and resellers can charge their own fees ontop of the registry charge, it is very possible different providers will charge substantially different prices! Some providers may give you a ‘free domain’ if you purchase hosting for a year however they are ultimately subsidising the purchase a loss leader to get your business. Our recommended retail domain providers to get the lowest prices on domains are Porkbun and VentraIP for specifically ‘.au’ domains.
ICANN and Regulatory Fees
A lesser known component of a domain names cost are the fees payable to ICANN who manage many of the top level policy and technical systems of the internet.
These fees are paid for both by the registry and registrar and ultimately get passed onto the end user.
Registry Fees
The registry is responsible to several fees which include:
- $185,000 application for each new gTLD and yearly renewal fees to maintain it
- Per transaction fee for each domain registration/renewal/transfer
- Variable fees based on market share
Registrar Fees:
- Registrar Accreditations of $3500 Application Fee and $4000 renewal
- Per transaction fee for each domain registration/renewal/transfer
Conclusion
In summary, the cost of registering and renewing a domain names is a collection of various charges charged by the registry, registrar and in some cases reseller of the domain. You should certainly shop around for the best price on domains every couple of years.