Domain Pricing 101
If you work on the business development side of a company in the domain names industry, at some point you will face the need to do market research and price analysis.
After many years in this industry, as for Openprovider, this is the approach we find the best working for this job:
Identify your closest competitors, and make a list with their names:
- – Write down every competitor you may know, and don’t forget to ask your colleagues for more ideas and feedback about your list.
- – Use sites like namestat.org, newgtldstat.org, or domainnamestats.com to compile this list.
- – And then, search a competitor’s name and see associated keywords to find out what other names people are searching for. You can make use of Keywords everywhere, a free tool that helps you with this task.
Now that you have the competitors list, it’s time to collect their prices for operations with domain names: register, renew, and transfer. Make sure you also include their additional costs, such as the ICANN fee, or a processing fee, in a separate column.
Then, you should analyze the market offer. Ask yourself the following questions:
- – What is the minimum price for all operations?
- – What is the maximum price?
- – What is the median price – meaning, what is the average price half of the companies sell for? We suggest using the median instead of average, as it is not distorted so much by the small portions of extremely high or low prices, and thus better represents the market state.
And finally, identify the companies with cheap registrations and cheap updates, add their additional costs, if any. And see the cost for 2 years. Most companies drop their price for the first year and make renewal excessively expensive, which leads to a high percentage of non-renewed domains, and a high churn rate.
Here is an example calculation for 100 .com domains:
|Buy||Renew||Added costs||2 years costs|
So, even the lowest registration price does not guarantee a low total cost of ownership, especially if the limitation is to maintain 33 accounts at one provider, which, even priced modestly, can add $330 to the yearly costs. This is why the calculation of 2 years’ domain price gives a higher precision.
As we always mention, we sell domains at our cost-price. And, even when we drop the price for the first year registration, we do not compensate it by super-expensive renewals, because we want your customers to stay with you longer and they don’t transfer out to renew at a cheaper price. And at Openprovider we make renewals as easy as possible.
We hope these tips help you define your domain pricing.