Understanding the cost of a domain under a “premium” TLD such as .rich, .inc, .auto, .car, or .pr

Question

We (a newly created startup) came up with a great name and we were looking to start our brand on a matching domain. We found our name fits perfectly with one of those "premium" top level domains that cost a couple of thousand dollars. However, that is just too much for a startup

I may understand the price of a .bank for 750$, maybe, or domains with only one registrar, even hotels for 65k$ seems stupidly expensive. But not sure why, and how, domains of about 1k$ ~ 3k$: .dealer, .car, .cars, .auto, .security, .protection, .inc, .rich, .lotto, and .pr. They all have about 15 to 35 registrars, all of them share "similar" price. (prices from https://tld-list.com/tld-categories)

How do domain prices get establish under those top level domains? Doesn't setting a high price go against free-competition and illegal price-fixing?

Answer 1

how those domains prices get establish?

There is nothing to understand. Registries decide the price of their premium domain names based on what they want and how much they think they should cost that is how much they think people are prepared to pay for them (technically, for a registry, any single name is exactly like any other, it means that the cost to run the system, per domain name, is the exact same amount for any domain name basically - one could argue that the most known ones will tax the registries nameservers more but that should remain a minimal impact due to DNS caching -, so premiums are just a way for the registry to manage their list of domains and try to get more money out of some of them). It is the exact same problem on the "second" market, how do you judge the price of any given domain name? This is far from being objective.

I am sure that whatever domain you will buy today at some price, in one year, you will believe that if you sell it you should earn more money than what you paid today, because it is "known", it has traffic, etc. This case is not so different with registries having premium domain names.

isn't this price establishment goes against free-competition and illegal-setting-prices

You are using big words here. No one forces you to register a specific name, you can choose any other. So why would it be against free competition? You are free to compete with any single name you want, that has no consequences on prices for all other names.

And why would it be illegal? Based on what law? Each registry is the sole entity dealing with domains in its TLD or zone, and decide if it wants to give them for free, for a standard price for all or for different prices per domain based on local and subjective criteria.

gTLDs are covered by ICANN agreements. You can see a lot recently about .ORG or .COM and how the contracts are changing to allow more liberty for registries, at least for the one before the 2012 opening. All the new ones after that date are already basically free to use whatever pricing they want, they are only required to announce (to registrars) any price changes (do note that it also happens that some domains change category going from standard to premium or the opposite).

For ccTLDs it is more complicated, as each government decides on rules, and you will find less premium in those cases. But it can happen too.

Also do not forget about registrars: they will put their own margins, which may be higher for premium names. But that can explain why you see "similar" prices, registrars can only work with the registries prices (there are sometimes discounts and things like that, but certainly not for premiums).

The subject of price comes regularly, maybe my other answers can also help:

• https://webmasters.stackexchange.com/a/127001/75842
• https://webmasters.stackexchange.com/a/126884/75842
• https://webmasters.stackexchange.com/a/126864/75842

TL;DR: even if that is not the answer you would like to hear, in your case my best advice is: "if the name you want is not available - including not available in the price range you want to pay for it - just stop trying to go around this fact, and just choose another name, in the same or another TLD, this is the fastest and simplest path".

Bonus points:

I may understand the price of a .bank for 750$, maybe, or domains with only one registrar, even hotels for 65k$ seems stupidly expensive.

Some TLDs are restricted to some eligible entities only. High prices can be part of the deterrent package. However, you seem to mix both standard price (which registries are free to choose, it can be from $1 to hundred of dollars, excluding premiums of course), and specific premium pricing.

(prices from https://tld-list.com/tld-categories )

The categories you see here are purely arbitrary. They were not started through this scheme. And of course you do not see ccTLDs. The prices then shown are from some registrars, I do not think you can conclude anything on how many registrars were polled (registrar prices are far from publicly available in a standard format for all cases), data freshness, and other things. Said differently: this is just one data point among others.

We (a just born startup) came with a great name

You can always try to contact directly a registry and asks if they can do anything for your case. Sometimes it happens. For example right now .new is not available for the general public, but might be available for some ".new advocates" that the registry decides and who will have a domain. Again, if you are sure of yourself and have time to spare (and will accept a lot of refusals or no replies at all) you can contact the registries directly.

Answer 2

Also, registries paid a lot of money for the rights to a gTLD. They are trying to recoup their outlay plus make a profit that covers their running costs. If a domain extension isn't likely to be all that popular e.g. .dealer, the cost per registration is going to be higher.

Aside: I imagine all the very cool .dealer domains are gone...they have to do something with all that cash ;o)

Answer 3

It is important to keep in mind that even gTLDs are not all governed the same. For instance legacy extensions like .com/.net are subject to contracts + DOC oversight. So the registries are not free to set prices at will or apply differential pricing (make 'premium' domains more expensive to register or renew).

On the other hand so-called nTLDs (new top level domains) are not subject to price caps, unless they voluntarily set any...

If you remember, there was uproar about .org not long ago, not because of the thwarted purchase by Ethos, but over the fact that price caps were lifted by Icann... even old legacy extensions are not safe.

And then you have ccTLDs (country code domains). They are all different, and they are sovereign which means Icann has no oversight. Some are mature and reasonably safe, others much less. Do your homework.

Yes, some sites like to use ccTLDs like .ly (Libya) or even .sy (Syria). What could possibly go wrong ? Things can and have gone wrong in the past, do research.

Now, to address nTLDs specifically you have at least two issues to consider:

• pricing can be expensive today, could become outrageous in the future
• long-term viability: dozens of corporate extensions have already been retired, and it is only a matter of time until generic nTLDs suffer the same fate. Imagine you built your online presence on a TLD that is retired afterwards. This will not happen overnight but this will happen. In fact some extensions are already failing, for example .wed has been in EBERO status since 2017.

Conclusion: do your homework and think carefully.

You have to think about your competitive advantage. You have plenty of choice so you should have a good reason for using a specific domain extension. It should align with your branding plans. But this your startup, you shouldn't put your business at stake just because you want to experiment something cool.

If you are willing to pay, say $750/year for a domain name, after 10 years of ownership your total investment will amount to $7500 barring any prices hikes or 'surprises'. I think I would rather buy a domain name on the aftermarket with that money, and then pay $10 every year in renewal fees. Disclaimer: I have sold domain names so I may be biased.

The problem with nTLDs is that they have disparate pricing policies. You will find that some registries have very reasonable pricing for 'ordinary' names, but sell premium keywords at a much higher price.

On a more personal note: yes the pricing is often outrageous. I can understand premium registration fee (one-off fee) but premium renewals is an awful proposition imho. The worst is that you do not have long-term guarantees. The best you can do is renew for 10 years ahead. Of course the registries have to make money and recoup their investment. Applying for a nTLD and running a registry is not cheap. The sad reality is that many are not viable because:

• there is not enough interest but too much competition, too many extensions already
• their business plans are flawed
• their expectations are unrealistic

So registries will fail, extensions will fail. But their failure should not be your failure.

Bottom line: research.