Why Do Domain Names Have Different Prices?

A good domain name is one of the most important things a business website should have, but if you’ve ever tried to purchase one, you’ve probably noticed how much the cost varies from one name to another. The same domain name might cost completely different rates at two separate domain registrars—and rates could even vary between names at the same registrar.

It might seem like domain name pricing is totally random, but in reality, multiple factors determine the cost. These include your choice of domain extension, costs set by registries and registrars, and more. In this article, we’ll go into more detail about how domain prices are determined and the ways they change over time.

New Domain Name Pricing

In most cases, creating a business website means choosing a domain name that isn’t currently in use—either a new name or a previously active domain that has lapsed and become available again. Either way, the cost will be determined by the top level domain (domain extension) you select, the perceived value of the name itself, and the policies of the domain registrar you purchase the name from. Understanding these factors will help you anticipate what you should expect to pay for the domain you want.

How top-level domains affect pricing

Top-level domains (TLDs) are the extensions at the end of any domain name. They play a big role in what your domain name will cost. You’ll generally have the option of selecting from standard domain extensions, country code extensions, and new generic extensions.

• Standard Extensions: The original TLD extensions (.com, .net, .biz, .info, and .org) are often good values, being perceived as easier to remember and less-expensive than newer domains; but their popularity means any given domain name may not be available to purchase.
• Country Code Extensions: Extensions associated with specific countries or similar geographic locations, such as .ca, .co.uk, and .us. These TLDs vary in price, with some commanding more expensive rates (for example, .tv, the extension for the small Polynesian country Tuvalu, tends to cost more due to the useful association it has with “television”).
• New Extensions: Introduced fairly recently, new generic TLDs are also available, with a huge number of available extensions. The cost of these extensions vary based on demand. Currently, “.ai” extensions are rather expensive because artificial intelligence is trending, while less obviously applicable extensions like “.name” or “.xyz” command lower rates.

Registries and regulators

Top level domains are managed by registries for specific domain name extensions. For example, all .com, .net, and .name TLDs are registered to a name server operated by the US corporation Verisign, Inc. Verisign sets the basic wholesale price of domain names using those extensions, the same way different registries around the world do for other TLDs.

Those wholesale prices are overseen by the Internet Corporation for Assigned Names and Numbers (ICANN), a regulatory body that does not directly set prices, but ensures certain rules capping prices are followed. ICANN’s current agreement with Verisign limits its wholesale TLD prices to a maximum 7% yearly increase. That limit affects both new domain purchases and the cost of renewing a domain name, so you can usually expect renewals to cost at least a bit more than what you paid at registration.

How domain registrars affect pricing

After the wholesale price of a TLD is determined, domain name registrars accredited by the registry reserve specific domain names for buyers. At Northwest, we are the registrar for the domain names you choose for our web services.

In general, domain registrars set baseline rates for the names they offer, with those rates mostly varying based on the type of TLD associated with the name. However, the rate can change even between a single TLD. Short names are seen as more valuable, being easier to remember, so length may impact name costs — a long domain name will be less expensive than a short one.

Some registrars also set different prices for names using certain terms. A fairly generic name that can be used for a variety of purposes will likely cost more than a very specific one with more limited applicability. But on the other hand, if a certain subject is trending in popularity, even very specific domain names associated with that subject could also cost more.

A registrar may also provide extra benefits along with the purchase of a domain name, such as privacy protection or security features. Registrars that offer little to no extras often charge a lower rate than ones that include other benefits.

Buying an Active Domain

You might also find yourself in a position to acquire an active domain that’s already registered. This can seriously alter normal pricing dynamics, due to a number of factors:

• Domain Age and History: Older domains often cost more, especially ones with significant traffic or a strong SEO presence. Domains with a clean history and few prior issues like spamming are more valuable than sites with a troubled history.
• Keywords and Brandability: Just as when buying an unused domain, existing domains that contain popular keywords or are highly brandable (short, catchy, and easy to remember) also tend to go for higher prices.

Marketplaces and Auctions

Valuable domains are often bought and sold on marketplaces or auctions. This can drive prices up as multiple buyers bid on desirable domains, with the final price often being determined by how what a buyer is willing to pay for the perceived value of the domain name.

Ongoing Domain Costs

Outside of initial costs, owning a domain name involves long-term expenses that you should consider before making a purchase.

Renewal Fees

Most domains require annual renewal fees, which can vary depending on the TLD and registrar. Premium domains or those under certain TLDs might have higher renewal costs. Some registrars offer package rates for domains lasting multiple normal renewal periods, allowing lower overall cost for more money upfront.

Privacy Protection and Additional Services

Registrars often offer additional services like privacy protection (keeping your personal information private in the WHOIS database), email hosting, and website building tools. These services may be standard parts of a web package, or options available for a higher fee. Either way, they usually add to the overall cost of owning a domain.

Get a free domain name for a year when you hire Northwest to form your LLC or serve as your registered agent. Want more? Sample a free 90-day trial of our Business Identity package for a pre-built business website, business email, SSL security, and phone service.