Does a Rise in Registration Costs Affect Domain Values?

Once again, a rise in the costs of registering .com and .net domains are coming due to Verisign’s price increase to registrars on January 15, 2012 for the two extensions. What impact do these price increases ultimately have?

Even if you’re involved in the domain industry, if you haven’t been for long, you may not have judged the impact of other increases. Here is the history of Verisign’s price increases for .com:

  • October 15, 2007: $6 to $6.42
  • October 1, 2008: $6.42 to $6.86
  • July 1, 2010: $6.86 to $7.34
  • January 15, 2012: $7.34 to $7.85

From October 15, 2007 to January 15, 2012, there will have been a 30.83% increase in the cost of .com registration at the registry level. Some registrars will have passed on a higher increase to their customers.

When considering these increases, you might first believe they probably slow down .com registration and renewal numbers. After all, the cost of business for anyone owning/buying hundreds or thousands of domains would have gone up quite a bit. Not all other extensions are seeing the same increase either, which may start to make other extensions more attractive.

However, .com registrations have not slowed down. .com has continued to increase steadily in registrations, going from about 70 million registrations in 2007 to nearly 100 million now.

Clearly there’s no issue with lost demand over .com domains at the registration level. But what about prices paid for domains? Do the increased registration costs wind up impacting domain values?

It’s understandable to jump to the conclusion that it might worsen domain values, even if only slightly. When looking at obscure country-code extensions for instance, the registration fees can have a drastic effect on the value. A $150/yr TLD vs. a $50/yr TLD with all else being equal would see the first extension having far lower domain values. After all, the domain owner would be paying $500 more for the domain over 5 years, which a buyer would likely factor into the price of the domain.

The .com increase however is negligible in that regard. The increase in .com registration fees thus far would amount to only $6.70 more over 5 years. Considering most domain sales are at least $xxx or higher, $6.70 is too tiny of a percentage of the purchase price to make a difference.

Ultimately, Verisign’s price increases don’t really affect much except increasing their bottom line. While it indeed does lead to increased costs for everyone getting .com domains, it doesn’t tend to change any strategies relating to domains.


One Comment on “Does a Rise in Registration Costs Affect Domain Values?”

  1. Sharon Hayes says:

    Reblogged this on Sharon Hayes Dot Com.

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