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Can becoming an ICANN accredited Registrar save you money?

Many companies tend to focus on the perceived cost savings of becoming an ICANN accredited registrar, even though they are not fully aware of the actual cost involved.

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Frank Michlick
September 08, 2008


Frank Michlick

This article by Frank Michlick of DomainCocoon was originally published on the DomainCocoon Blog. Frank has been working with Domain Names and developed websites since 1995, is editor at DomainNameNews and co-founder of SharedReviews.

Frank Michlick has written 1 articles for DomainInformer.
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Many companies tend to focus on the perceived cost savings of becoming an ICANN accredited registrar, even though they are not fully aware of the actual cost involved.

For smaller domain portfolio holders becoming an ICANN accredited registrar may initially increase the cost of holding the domains. However, there are other advantages that should be taken into consideration, such as the improved security & control for your premium domain holdings held with your own registrar.

One time fees due at the time of application

  • $2,500.00 USD non-refundable application fee (not considered in the financial exercise below)
  • If you are buying an existing registrar, the price tag will be about $30,000.00 USD.

Quarterly/Monthly Fees & Dues

  • Variable ICANN Fee, billed quarterly as set in the ICANN budget and divided by the number of registrars. The fee usually ranges between $1,200.00 USD and $2,000.00 USD per quarter.
  • Fixed annual per TLD fee. $4,000.00 USD for the first TLD and $500 for any additional TLD. These fees are first invoiced after your new registrar has become accredited.

Ongoing Cost

  • Registry Registration Fees per Domain Name Year (currently $6.42 for .COM, fees will increase in October)
  • Per Domain Name Year (registration, renewal, transfer) ICANN Fee (currently $0,20)

Other Considerations

  • ICANN requires the applicant to provide proof of at least $70,000.00 USD in working capital. (This amount does not need to be transferred to ICANN.)
  • ICANN required Commercial General Liability Insurance coverage of at least $500,000.
  • The individual registries may require additional pre-paid deposits and proof of available working capital.
  • The cost of licensing and running a registrar system.

In other words, your annual fees for maintaining most basic accreditation for just the COM gTLD are as follows:

  • $4,000 annual accreditation fee
  • $1,200 * 4 quarterly fee (minimum assumed)
  • ca. $1,000 commercial liability insurance
  • Total $9,800.00 fixed cost per year

The base cost for a .COM domain name would be $6.42 + $0.20 ICANN fee, $6.62. Let’s assume that your current registrar charges you $7.95 per domain name year (= registrations, renewals & transfers), a difference of $1.33 of your base price. In order to get to the same price, you will have to process at least 7,369 ($9,800 annual cost divided by $1.33) domain name years through your registrar to match the price of $7.95.

Please note that the actual number will be even higher, since this calculation does not include the cost of running a technology solution for an accredited registrar.

 

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