In our previous blogs you have read about our view on the market. Foreseeing that the margin on domain names converges to zero, we have introduced our Flat Fee Packages. This subscription-based price model guarantees a strong competitive position to the customers of Openprovider. Our brand promise is that you get your domain names – within the limits of your Flat Fee Package – at cost price; in other words: Openprovider does not add margin to the domain names itself.
So, how is it possible that we review our prices every quarter and have already announced price reductions on extensions a couple of times, the most recent being just a few weeks ago? How can yesterday’s cost price be different from today’s cost price?
Registry price changes
The simplest example is a price change at the registry. The price drop for the renewals of .it domains from €4,00 to €3,30 is exactly for that reason, but also if a registry increases its prices (as .info did on the 1st of May) we will have to apply this change.
Fixed registrar fees
For some extensions you’ll see an almost continuous price drop, every few months. The most common examples are .de and .fr. These price drops are due to the financial structure of the registry: they do not only charge a fee per domain, but also an annual accreditation fee which is independent of the number of domains under management. In our transparent price structure, this fixed fee is part of the cost price of a domain name.
Let me provide you with an example on .fr domains. AFNIC, the .fr registry, charges a fixed fee of € 1.450 per year on top of the domain price of € 4,56. The table shows you the decreasing average domain fee:
You see that the annual fee dramatically increases the cost price at low volumes. Even at almost 1.000 domains, € 1,45 euro (more than 30%) is added to the domain fee for every domain! The average cost price will converge to € 4,56 in the end, but that requires really high volumes.
The more we grow, the lower the price gets and the higher your savings will be. As the volume comes from you (our customer), you indirectly control our prices!
Every quarter again we will re-investigate our cost prices and adapt the Flat Fee Packages.
Additional ICANN fees
Although unrelated to price changes, an important element of our price structure are the fixed and per-transaction ICANN fees. Customers sometimes ask questions about our gTLD cost prices, because this is non-transparent at registry-level.
First of all there is the annual fixed ICANN accreditation fee. Similar to the above .fr example, this fee is used in the average cost price calculation, although for .com, .net, .org, .info and .biz only.
Then there is the per-transaction ICANN fee which applies to all generic TLDs (gTLDs): ICANN charges the registrar $0,18 for each transaction, like a registration or renewal. That is the reason why our .com price (at the moment of writing) is $8,08 and not $7,85 as communicated by registry VeriSign:
- The registry’s cost price is $7,85
- ICANN’s per-transaction fee is $0,18
- The fixed fee share is $0,05
- Which brings the total cost price for .com for Openprovider at $8,08.
For .net, VeriSign is even less transparent: the bare registry cost price of $6,79 is communicated to the public. On top of this price, there is an ICANN fee of $0,75 payable by VeriSign to ICANN. The total price that VeriSign charges Openprovider thus is $7,54. Add the aforementioned $0,18 and $0,05 and that’s how Openprovider’s Flat Fee price of $7,77 is composed.
An overview of registries
Fixed annual fees
The above mentioned example of fixed fees that increase your cost price is just one of many. The following extensions in our Flat Fee Packages all require fixed fees to be paid to their respective registries. As a result, you may expect price reductions in all of these extensions in the future when our volumes grow:
- All gTLDs including .com, .net, .org, .info, .biz, .mobi and .cat
- The ccTLDs .de, .dk, .fr, .nl, .pm, .re, .tf, .uk, .wf and .yt
For all these extensions, your profit of moving to Openprovider is at least the annual fee that you do no longer have to pay, on top of potential other benefits.
Some registries reward the biggest registrars with volume discounts, or they charge smaller registrars an additional amount. As Openprovider is a serious player in all of these extensions, moving your domains to Openprovider immediately gives you access to the lower prices!
Additional fees or discounts based on size are implemented by:
- The ccTLDs .at, .nl, .nu, .pt and .se
Other registries do not reward bigger registrars in financial terms, but they just block smaller registrars. If you are too small to become a direct registrar of one of the following extensions, Openprovider still provides you with the registry’s cost price:
- the ccTLDs .be, .ch, .es and .li
A couple of registries require a pre-payment or a deposit. This is not directly related to the cost price per domain, but certainly affects your cash flow and internal processes. Deposits are required for:
- The gTLDs .com, .net, .org, .info, .biz, .mobi and .cat
- The ccTLDs .ch, .eu, .it, .li, .lu, .uk and .za
The extensions that are not mentioned above do not have restrictions or additional fees in place. So why would consolidating them at Openprovider be beneficial? Think about the time required to establish or maintain your contract, to implement and update your technical connection, or to handle and pay the monthly invoices or statements.
Somewhere else still lower prices?
On some rare occasions, a customer notifies us that the price at another registrar is lower than the price at Openprovider. In most cases he refers to a ‘special deal’: there are a couple of registrars that sell domains below cost price for the first year. They either make money on additional services (like hosting, paid support or huge re-activation costs), or they count on a certain renewal rate – renewals being charged at the full commercial tariff.
If you still have the feeling that another registrar’s prices are lower than the registry cost price at Openprovider, then contact us! We will be able to provide you with an explanation for that specific case.
A signal to the registries
There are registries that make serious profits every year. Even the not-for-profit ones. These registries are looking for ways to spend their surplus, but often the simplest solution (reducing the domain price) is left unconsidered. A common argument is that the end user will not benefit from a price drop – the registrars will put the additional money in their own pockets.
With our Flat Fee products and our price transparency we have a tool to convince registries to think about alternatives. A transparent price model will benefit the domain holder in the end.
As member of the Dutch Registrar Association, the Registrar Advisory Board of EURid, the DNS Belgium Registrar Forum and the Registrar Stakeholder Group of ICANN, Openprovider stands up for its customer’s interests. Apart from these formal memberships, we are actively participating in the other main European registry communities and are spreading our thoughts, our wish for a fully transparent registry-registrar-registrant market.
Published by Siemen Roorda