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.
#1: SiteDomains by Wealthy Affiliate
#2: Namecheap.com
#3: Godaddy.com
#4: Name.com
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.
Hey Kyle
I bought 3 domains for 99 cents 2 from Godaddy and 1 from 1 & 1. The Godaddy domains is for 2 years and the 1&1 domain is for 12 mons if i change to WA will there be any extra fees? I should be able to move them next month. I didnot take any of the other offers both domains were trying to sell… But I am getting emails every now and again from people trying to get me to get my web site through them or other marketing products….
There are no fees to doing a transfer to another domain registrar, but usually the requirement to register that domain for an extra year up front (will give you another year beyond that you have already paid for) just so that the new registrar knows that you are going to be using their service moving forward.
There is also a 3 month window after purchasing a domain where you cannot transfer it, so you would need to wait until after this period in order to make the transfer. Definitely can be done.
Hi Kyle, Thanks for bringing this marketing scheme to my attention. As someone who is always looking for a good deal, it’a good to know that sometimes the good deal is not such a good deal and that you should research the deal thoroughly before you commit.
I personally like the all in one package that I see Wealthy Affiliate is offering. I don’t want to find out later that what I thought was included was in fact not included. Thanks again for the information.
Sometimes a deal is just a good deal. Typically within the online business world though, you have to be careful about things that seem “too good to be true”. This is definitely the case for $0.99 domains.
The companies that offer domains at this price have to make up for their losses, typically this is done through upsells…but if they cannot get you on buying hosting, an SSL certificate, whois privacy, or email accounts, then they recoup their costs for these cheap domains through very high renewal prices on subsequent years.
Hi Kyle,
What an illuminating and to be honest eye-opening article that you wrote having to do with .99 cent domains. Yeah a person buying one now, may found out much too late that they’ll end up paying later when without notice the price of that same domain suddenly goes through the roof 366 days following the initial purchase.
Over at GoDaddy, for instance in purchasing a domain you simply have to ignore all of the up-sells that this organization tries to twist you arm into purchasing. If one belongs to a great organization like WA, those having to do with hosting, email accounts and so on are already included.
The sad thing is that the “newbie” just getting into niche marketing has no idea and falls for the scheme and not knowing any better goes ahead and purchases all of those unnecessary up-sells.
That’s why as is clearly indicated in the graph comparison that WA without question is the best place to purchase domains. Unlike the other 3 organizations that you compared to WA, a person won’t be paying a lot of $$ down the road as his/her online business grows.
The price at WA stays the same. No one else can make that statement including the “supposedly” great GoDaddy.
Great article Kyle!
Jeff
It is an absolutely “boobie trap” for newbies, but it is also a trap for those that are experienced and that have intentions of getting the cheap domain and moving it before the domain renewal comes around the following year.
$0.99 is a common loss leader used in the domain/hosting industry, once they have your information they have a whole deal of upsells that they are going to make money from…and if they don’t make money off those, they are going to hit you with a 2nd year renewal price that will make up for their losses from the year before.
I have also used namecheap and can say that it is defiantly easy to use and I spent around $10 per domain that I have bought. The sign up is quick, and it remembers your card details so that you do not have to constantly re-enter them when you want to buy another domain.
I have not tried another site, as I feel there is no need to if name cheap is doing the job. What would the advantages be of using godaddy or name . com?
Thanks
Yeah, namecheap definitely has a good process in pace and it they are a very clean platform to use. The next year “whois privacy” is an add on and there are many upsells within their process that are unneeded, but overall my experiences using namecheap.com have definitely been good ones!
I think the worst part about all of this is that many of the people buying these domains are first-time website buyers. In such a case, they have no idea what to look for, and would easily be lured by $0.99 price. Even I will now be making sure to keep a close eye on my domain renewals to look out for any funny business, or else I’ll be soon switching to Wealthy Affiliate.
Yeah, definitely the case. You have to believe that a high percentage of domain buyers are first time buyers and that they are completely naive to the underlying business model of upsells that they are going to get hit with.
Domain Registrars that offer $0.99 domains are very smart with their numbers and their ROI. The likes of Godaddy would not be able to offer people a $0.99 domain year round or bulk $0.99 domains on Black Friday if they weren’t really profitable for them.
Many companies use this as a way to generate a “customer” at a low ticket price, so they can sell higher ticket items to them (hosting/ssl/whois/website builder/etc)…something that I have never been a fan of.
Yea,h you are so true. Some domain websites are really expensive and they don’t show it when you are signing up because they know that you are not going to sign up. Once you have your domain with them, you will probably have to renew it a year later, then you don’t have a choice unless you want to transfer.
You will have to renew your domain and pay a lot of money. Thanks for your info so people don’t have to pay unnecessarily more on their domains
When someone buys a $0.99 domain I think that often times the intention is to transfer that domain over to another registrar before the renewal takes place. Unfortunately the domain transfer process is cumbersome, we all get a little too busy and focused on our businesses and then tell ourselves it is not worth it to move it.
Then we end up paying $10+ more per year too much for the domain. At that point the $0.99 domain isn’t such a good deal afterall, but the initial offer does a very good of sucking a lot of people in.
Thanks for the information. I have never thought about .99 cent domains. I always ignore them because it seems kinda of fishy to me. I am glad I read your blog which explains to me why it seems too good to be true.
I also liked your comparison chart… It make me feel better about switching from Godaddy to WA.
So thanks for the info, good luck with WA and have a great weekend,
Dan
You are like me, when I see something like this I tend to lean towards “if it sounds too good to be true, then it probably is”. I have bought domains for $0.99 just out of pure timing, but when it comes to buying domains I don’t always look for the cheapest first year, I look for the cheapest over time and the company that will not inundate me with a myriad of upsells.