Why are certain long domains so expensive

These price factors determine the composition of the top-level domain prices

The purchase prices of domains differ significantly: some domains cost a few euros, others cost several hundred euros.

The prices depend on various factors: For example, almost every company knows from their domain bills that .DE domains are cheaper than .COM or .CH domains. A dependency results from the TLD, the top level domain. But why is it like that? How are the domain prices made up and what other price factors are there? With this article, we are giving the pricing of domain bookings a little more transparency.

The final price is essentially influenced by three players: On the one hand, there are the issuing agencies that operate TLDs. On the other hand are the registrars or the companies that offer domains. The third part is the customers who buy these domains. Certain price factors are the responsibility of one of these parties, while others are influenced by all three.

These factors influence the prices of the TLDs on the part of the registry

The operators have different intentions

What first characterizes the financial value of TLDs becomes clear when you take a look at the operators or the issuing offices behind them. These have different backgrounds and intentions:

  • The DENIC eG for example, is a cooperative under which registrars have come together. Registrars are the providers of the domains from which companies can buy domains. This means that the registrars are interested in this: the focus is on high cost efficiency.
  • A .COM domain, in turn, is a domain that is owned by a privately owned US public company Verisign Inc. is awarded. For this purpose, the company bought Network Solutions in 2000, which until then had operated the .COM, .NET and .ORG TLDs. Due to the intention to make a profit, the prices are often higher here.
  • Another example is the Swiss foundation SWITCH. It is also the operator of a registry, namely for the country-specific TLD .CH. In contrast to a cooperative or a listed company, the administration is in the hands of the state. This has a positive impact on prices.

More registrations lead to lower prices

According to the different intentions, the number of registered domains is another price factor. In particular, registries whose market is limited and who can therefore expect fewer registrations have to charge higher prices in order to economically map the very cost-intensive, secure operation of a TLD. Examples of this are TLDs that are intended for certain target groups or restricted depending on the location. Some examples:

TLD

Determined for:

.GMBH

Company of the legal form GmbH

.BIZ

business websites

.AERO

Air carrier

.MUSEUM

Museums

.JOBS

Employment agencies

.CAT

Catalan linguistics

A higher degree of automation leads to lower TLD costs

Along with the number of registered domains, the administrative effort increases accordingly. A natural business response to this is automation. Large registries have automated processes that can map the mechanisms of registration in real time. Smaller registries, on the other hand, have a higher proportion of manual work, possibly with paper work.

The influence of the domain provider on the price composition of a TLD

Service development as a domain provider

As with every company, registrars and resellers also incur costs for developing the services in the context of TLD administration and for operation, which are partially offset by the pricing of the domains. On the part of the customer, there is much less effort involved in implementing corporate domain management. Ideally, all of the company's domains, completely independent of the TLD, can actually be managed centrally by one provider in just one web tool. This time saving for the customer results from the development costs for the service of the domain provider, which of course has an effect on the prices.

Accreditation and registration to become a domain provider

In addition to the development and operating costs, there are other financial hurdles to overcome, especially when it comes to the accreditation of the domain provider: Depending on the country and in particular the connected TLD, there are costs for examinations, training courses, technical solutions, maintenance, as well as fees and security services. A concrete example are bank guarantees. These expenses and capital commitments are also projected onto the domain prices and thus represent a cost factor.

Resellers and sub-resellers drive the price

In principle, the providers take care of the registration with the registration offices on behalf of the customer. Providers are either registrars or resellers. Examples of the latter are most advertising and internet agencies, hosting providers or system houses as well as various other IT service providers in the web sector. Resellers use domains for customer loyalty and earn money from the sale. The same applies to other sub-resellers, the reseller chain can be astonishingly long here.

The direct influence of the customer on the domain price

A customer has a direct influence on the price of a domain in two ways: For example, he can change its price upwards through additional services or other special services and requirements. These costs are added to the base price. Examples of such additional services are:

  • Trustee service: The customer requests a local contact from the registry: In Brazil, for example, the relevant .BR TLD requires a place of residence in the country.
  • Whois privacy: The owner of a domain should be anonymized on the Internet
  • Protection mechanisms: IT security services to protect system-relevant domains in particular, e.g. anycast DNS, registrar protection and much more.

In addition, large domain portfolios within a TLD can lead to price discounts. This volume discount is possible due to the reduced administrative workload for the domain service provider. Such volume prices depend on the registrar and the number of TLDs. Factors influencing the market

What about price-determining demand?

Of course, the principle of the market also has an impact on the costs of the TLDs. The .COM domain has been the best-known TLD for years, which is why the company behind it can generally charge higher prices. In addition, there are premium domains with particularly short and concise and therefore sought-after terms, which are also sold at a higher price. However, this principle has a much greater influence via the secondary market or the trading of SLDs (Second Level Domain) - i.e. via the actual "name" of a website. The power of pricing can be on the part of the registry as well as on the part of the current domain owner. Awareness and rarity are price drivers here, which in exceptional cases can skyrocket the domain price to a 7-digit amount.

Currency fluctuations affect the price of a TLD

Incidentally, the same applies to another mechanism of global markets to which international business relationships are practically always subject: currencies and their fluctuations.

Crucial for companies: cost advantages thanks to corporate domain management

Domain management is a separate service that does not have to be technically linked to web hosting or other offers. It is therefore a widespread misconception that the domain, for example, “belongs to hosting” and cannot be managed separately. Web agencies like to use the domain in this sense for customer loyalty. However, this involves risks such as the loss of the domain or long response times in the event of a server failure, which can lead to high follow-up costs. In addition, there are cost drivers such as the resource-intensive decentralized administration of domains in the company.

Response times in the event of attacks or server failures

Web agencies don't always work. If you don't have expensive service contracts, you have to expect that nobody can be reached at the weekend, for example. In the event of an attack on the server or a technical server failure, it may not be possible to react quickly enough. The result is high damage and the expense of removing it. If you had control over your domains yourself, the redirection to the second system would be a matter of a few minutes.

Decentralized domain administration as a cost driver

Departments order domains from different providers, which in turn leads to separate invoices. In addition to accounting, this additional effort also affects other departments and of course those who own and manage domains. Cross-departmental coordination is also made more difficult.
Central domain management reduces these structural and time-consuming efforts - and thus also the costs. In addition, there are lower risks and weaker dependencies as well as possible volume discounts. You are welcome to check how high the cost savings would be for you:

Comparison offer for the administration of domains