: If ICANN only charges 18¢ per domain name, why am I paying ? ICANN charges 18¢ per domain name registered regardless of its extension, but I pay for a domain name per year with my

@Turnbaugh106

Why do some top level domains cost considerably less than others?

Top level domains such as .com, .net and .biz have fixed wholesale prices negotiated between the registry and the non-profile Internet Corporation for Assigned Names and Numbers (ICANN), which is kinda like a domain regulator

The pricing of older generation TLD domains have a limit what they can be sold for and this limit is set by ICANN which is why some domains hardly ever move in price. However it should be noted that this cap does not include already purchased domains that you often see at auction for thousands of dollars.on.

Newer gTLD's domains such as .club, .sexy and .security have no ICCAN limitations on how much a wholesaler can charge, this also applies to two letter country domains such as .us and .ca.

Whom are these Domain Wholesalers?

Wholesalers is just another term for domain registry, the registry is not to be confused with a registrar, for example Nominet is for registry for ccTLD domains in the UK. Nominet does not sell domains directly to customers, they are sold through registrars, it is Nominet who set the cost of the domain under the agreement with domain regulator.

VeriSign is the registry for .com and are limited by ICCAN how much they can charge but they have many other top level domains that may not have the same agreement.

Where does my money go?


Domain Registrar
Payment Fees (Debit, Credit, PayPal etc.)
Domain Registry / Wholesaler
Domain Regulator


What percentage goes to the regulator, registry and registrar?

The percentage of the sale of each domain varies because it has varibles such as:


ICCAN fee agreement with the registry
Registry fee agreement with the registrar.


It's impossible to know exactly how much the registrar makes because often this is inside only information, some registrars strike better deals than others depending on the volume of sales they expect to meet, but what can be said for certain is that the registry will receive the most money and net profit will only be made once the sales exceed the cost of their application and yearly regulator fees.

It's worth pointing out that gTLD domains generally cost more because the application for such domains run into the £250,000+ excluding the annually fees.

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@Turnbaugh106

This question isn't specific to domain registrars, this is a business related question. If X costs Y why do I pay Z?

The answer is simple, registrars are generally multi-employee salary paying organisations. They must meet certain criteria and pay fees for ICANN accreditation. They must invest in infrastructure, websites, helplines, etc.

All of this costs money, and until you buy a domain that is money the registrar has invested at their own risk. Thus they must charge you more to offset the cost and profit enough so that the input has been worthwhile.

If you feel you have found a gap in the market and think you could offer the same services for less then you should research it, see what your outgoings will be and how many domains you would have to sell to make a profit. You might be surprised how competitively priced they really are, if you are not surprised then congratulations you have just found what is likely to be a profitable business.

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@Heady270

A other answers have said, large portion of your money goes to Verisign. Verisign is essentially government sponsored monopoly over .com and .net domains. You may ask how did that happened when US supposed to so despise monopolies?

Here's how:

Early on registries were free, funded by government and run by InterNIC. Then the government decided to privatize it. The contract to manage .com registry was granted to a company called Network Solutions, Inc (NSI). At that time the US Government actually paid .9M to NSI to do administration but then NSI managed to convince them that people should be charged to cover the cost instead. Eventually Verisign bought Network Solutions and become the entity which manages the .com registry.

Everyone was starting to realize that NSI/Verisign was becoming a monopoly for an important part of the modern economy. ICANN was formed in 1998 and chartered to introduce competition in this area. But instead they ended up doing almost exactly the opposite in the next series of events.

Early in 2003 Verisign introduced a service called Site Finder which redirected users to a search engine if the domain didn't exist. ICANN said this was "overstepping the contract terms". Verisign shutdown the service but also sued ICANN for not being allowed to bring any improvements. Eventually ICANN had to settle with Verisign and the prize of the settlement was that Verisign would be awarded contract renewal without any bidding plus the right to raise prices without showing cost justifications. There were even terms that indicated Verisign can continue its monopoly for the long term. If you ask me this is blunder and incompetence by ICANN at mega scale.

Industry was furious. Lot of people commented on ICANN's proposal of settlement by saying that .com registry is not the property that ICANN owns to leverage in settlements. Others said no other government agency knowingly consented to unchecked price increase without cost justification. But it was all in vain and ICANN directors voted 9-5 in favor of settlement. Due to industry outrage, the US Department of Commerce had to intervene and eliminate the clause for Verisign's right to increase prices by 7%. You can say that Verisign showed benevolence for not increasing prices to what was already considered ridiculous.

In cases like this, typically competitors bring antitrust lawsuits. It happened against Verisign in 2010 but they escaped without a bruise because the organization CFIT which had filed this case wasn't considered a competitor or financially injured. It also surprises me that real competitors haven't come forward against Verisign to bring a large scale antitrust suit.

So when you pay that , it's ICANN's massive blunders of the last decade to allow Verisign to continue their absolute monopoly. Verisign has benefitted dearly with this. They have billion in cash and billion of yearly revenues from all the payments you hand out to them. Verisign's financials indicate that this is their highest margin business.

One light at the end of the tunnel is that US government has announced plan to relinquish the control of Internet which means ICANN might not have authority to hand out monopolies any longer. Their stock took big hit when US government announced this.

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@Hamaas447

ICANN doesn't register domain names

Your question assumes that the amount ICANN charges is a 'registration fee' and that you (or anyone else for that matter) can register "directly from ICANN" - which is simply not true.

Think of it as a small tax - for each TLD there is a registry that handles the actual registration, but to support the top-level infrastructure (that doesn't even keep a list of what not-top-level domain names exist, i.e., does not register the domains), each registry pays some amount to ICANN. To make it "fair", it's calculated in proportion to the domain names they have, and it seems that it comes out to [CO].18 per domain.

That [CO].18 doesn't in any way relate to the cost or price of registration - it's a small "infrastructure fee" for the "umbrella organization" that's included in the total cost.

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@Shakeerah822

ICANN and your registrar are not the only parties involved. There is also the registry, the organization contracted by ICANN to operate the TLD in question. The bulk of the revenue is actually going to them. The .biz, .info and .org registries, for example, all charge over . Verisign, who operates several major TLDs, was famously forced to stop increasing .com prices in 2012, leaving them at .85. They're still allowed to raise prices of their other TLDs, though: .net was raised to .62 last year, and .name to .60.

On the other hand, I suspect the story is different for all those new -100 domains. The registries charge a lot of money, and the registrars probably mark them up, too. I bet they're both raking in the dough.

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@Eichhorn148

ICANN lists a set of qualifications that registrars must be able to perform. Among these are:


Capabilities for registration and transfer of domains
Requirements for security and scalability
Backups
5 employees
Carry insurance
Have cash in the bank


ICANN maintains a list of hundreds of accredited registars. All these registrars have to compete with each other on price, customer service, and brand recognition. Given the stiff competition, I would say that fees that registrars charge are determined by the market. If a registrar could meet ICANN's requirements and offer domain names for significantly less, then one would do so.

As Matt Nordhoff points out, the registry itself also gets a substantial share of the money you pay for a domain name. For example when you register a .com domain, the fee is split:


ICANN: [CO].18
Verisign, Inc. -- the .com registry: .85
3% credit card processing fee: [CO].30
Your registrar: .67


High prices charged by registries are likely because of lack of competition. There have only been a handful of registries, and of those, the .com registry has been the most popular by far. In the last year ICANN has created many new top level domains run by different companies. They have done so partly in the hope that it will increase competition and drive down prices. It is unclear at this point whether that will work. The costs that new registries must pay to ICANN to apply are very steep. That may prevent any of them from being able to offer low prices on the domain names in their registry.

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