Products Critical to Registrar Success — High Margin
Forget domains — it’s the add-ons that separate winning registrars from losers.
Over five years ago I started an intellectual property licensing firm (I long ago left the firm.) We would help firms license technologies they developed for internal use.
In the grand scheme of things most of our Fortune 500 clients didn’t make much from technology licensing relative to their billions in core product revenue each year. But it was high margin. I recall one of our clients discussing how he pitched it within the firm. His superiors would ask him “why are you wasting your time on a $5 million deal?” He’d point out that the firm’s typical margin was only 5%. His margin on a licensing deal was practically 100%. So completing a $5 million licensing deal was like completing a $100 million traditional deal for the firm.
The domain name registration business is one of low margins. It’s difficult to get rich if you’re selling domain registrations at a $1 markup. That’s why the smart domain registrars have focused on selling value-added, high margin services:
-web hosting
-private registration
-aftermarket domain sales
If you’ve ever worked with affiliate programs you know that web hosting firms will pay you over $100 per fresh account you bring to them. The margins are tremendous.
An example of a firm that figured this out early on was GoDaddy. It even offered domain names at a loss if you bought one of its high margin products in a bundle. Would you lose $5 on a registration if it meant selling a hosting package that you’d normally pay a $100 commission on?
