I often times see people waiting or a yearly Black Friday sale to purchase their domains. A.com can often times go for sale on Black Friday for $0.99. Amazing deal right? Well that is where things get a little blurry in terms of the marketing so what I am going to do is explain exactly how the business model behind $0.99 domains work to offer you a little bit of perspective.
$0.99 Domains, It is a Loss Leader for the Company
If you don’t know what a loss lead is, it is when you sell something at a loss in order to lead into another sort of purchase or upsell down the road. You see this technique implemented within the freemium world along with many software based services online. One case of this is a $0.99 .com domain. If you buy a domain at this price from a company like GoDaddy.com (whom commonly sells domains at huge discounts), it will be at a loss.
This is good for you, bad for the domain registrar selling it…in theory. In order for them to recoup their costs, they will be forced into selling other related services or jacking up the domain costs in subsequent years and hoping that you continue to keep your domain on their service.
The Not So Obvious Upsells
When you buy a domain within most registrars, you will be innundated with a myriad of upsells. Most of these you will never need, but they can seem very alluring and the companies selling them make them feel like “necessities”. Some of the more common examples of domain related upsells are:
- Hosting ($3.99 and up per month)
- Whois Protection ($2.99 – $9.99 year)
- Website Builder ($19.99 and up)
- Email (ranges)
- Other Domain Extensions (ranges from $0.99 to $100’s)
Companies that offer such low cost domains (for the first year) need to make up these costs and that is why these companies rely on their other services to drive their bottom line. One of the most common ones is hosting, domains are just a “portfolio purchase” if you don’t have a hosting platform to run your website on.
Then to build your website, you need a website builder.
The Next Year Price is Much more.
This is where a lot of these domain deals will get you. The might not get you on the myriad of initial upsells, but they will get you on the surprise costs of your domains in upcoming years.
For example, I have godaddy.com domains that I bought at a very cheap price that are now a lot more, some being well over $20 (which is much more than industry standards).
Moving a domain is a real pain in the butt too, so even if you buy a domain with the intention of “transferring your domain” for the next year, often times you won’t get around to it or the process is too frustrating and time consuming that it becomes a nuisance more than anything (for the sake of $20).
But this is real money. You get lured in with the idea of a cheap, crazy priced domain, year 1 but more often than not you end up paying much more in the longer term. If you didn’t, there domain registrars would not be able to offer these sorts of discounts.
A New Domain Standard. Not Relying on Upsells.
I have bought 100’s of domains over the years and bought them from pretty much every domain registrar you can imagine. I have used 10+ domain registrars over the years, some have been good, some have been bad, and some I have been lead to vastly overpay for my domains (I have paid over $40 per year for a .com!)
Since domains are such a crucial component of your business, it is very important that you choose a registrar that you can trust, that offers you everything you need with one go (without a ton of upsells), and that doesn’t raise the prices of your domains with every year that passes.
Here are some recommended “world class” domain registrars and the break down of their specific costs, but very importantly also, the NEXT YEAR pricing.
And lastly, if you do buy a $0.99 domain name at any point, please promise me that you will be careful and aware of the next year domain costs. It is best to get this first year discount and then transfer the domain over after the initial 3 month holding period to a registrar that offers a good yearly rate and service, then to overpay on the same domain for many years.
If you have any questions about domains, domain registrars, how these “offers” work, or any experiences you would like to share about buying domains, please leave them below.