Price hikes on the way: 2020 in Review

Domain investor costs are regarding to increase.

This is the fifth in a series of posts regarding the domain name industry in 2020. Read the others here.

.Com prices are going up.

ICANN agreed to a contract extension with Verisign (NASDAQ: VRSN) in 2020. The extension allows Verisign to increase the wholesale price of .com domains by 7% per year in the last four years of each six-year contract extension. The first year for potential price increases began in October.

Verisign has postponed rate hikes during the pandemic but states it plans to enact the first price increase by October 2021.

7% might not seem like much, but it adds up. The owner of 1,000 domain names can expect to pay regarding $2,400 per year in additional renewal fees by the fourth increase.

And to Verisign, it’s a lot of money. There are 151.75 million .com domains registered. Upon renewal, the first 7% increase adds over $80 million of pure profit to Verisign’s bottom line.

(Domain owners will likely face price hikes in other extensions, too. ICANN lifted all price restrictions on most top level domains in 2019, counting .org, .info, and .biz.)

And thus continues the love/hate relationship between domain investors and Verisign. Domain investors spend time propping up the value of .com on domain blogs and in forums, all the while fighting against price increases.

Just a handful of years ago, Verisign wined and dined domain investors. Then it threw them under the bus.

But Verisign has also taken steps to try to placate registrars and big investors this year. This year, it ran marketing promotions that discounted the price of .com domains that were just dropped, padding the profit of drop catchers.

One thing is certain: expect Verisign to take full advantage of the price hikes it has been afforded. And that means rising costs for domain name owners.