Registrars are hit up on multiple fronts:

-ICANN charges contract fees, $100k+ to registrars to become accredited.

-TLD operators (like Verisign for .com and others for every other cool TLD your users might want to register) charge a base fee to the registrar per domain that is registered.

For example, Verisign (holder of the .com TLD) charges roughly $6 per domain to the registrar.

Registrars then have to pass on those costs to you AND add a little more for their own operating expenses and profit.

Many registrars use domains as a loss leader. They LOSE money on domains in order to upsell you on other services (hosting, SEO, ecommerce, etc.).

This seems like a problem that can easily be fixed with technology. We're in the industry of replacing inefficiencies.

Why don't we just replace ICANN?

Keep in mind if the price lowered, domain squatters would increase. I kind of wish domains were more expensive, so companies wouldn't sit on half of a million domains. They just mark them all at $1,000+, so they still make a profit if 99% of their domains just sit there and rot away.

We should price the .com at $50 or $100 per year. This will force the squatters and people sitting on domains to let the majority of them expire. That might help to reserve .com for higher quality sites. For example, look at something like the free tk extension, compared to something like io, that has a premium price. The difference is night and day.

Sure. You can do that anytime you want. But then you would split the namespace.

Because registrars have huge lock-in effects.

It is extremely tedious to transfer domains between registrars. There are periods around the renewal date where you cannot do this at all, and it might involve paperwork and phonecalls. The old registrar can stall and make it more difficult on purpose.

And if you are renewing a domain, it has some value for you. Registering a new domain might be an impulse purchase, but if you want to keep it after a year, you most likely have a site worth more than $xx/year running there. This domain might go offline for months or even be lost if the transfer is messed up.

Altogether, the old registrar can make it difficult to transfer domains out, and could cause you to lose the domain. Paying $xx/year is the easy way out, and they know it.

I remember paying Network Solutions $99/year back in 1997.

$8 a domain? It's cheap...

That was $100 for two years actually. In 1998, it was lowered to $70 for two years, after some legal wrangling over 30% of the fee going to an "Internet Intellectual Infrastructure Fund", which was likely to be deemed an unconstitutional tax, since the US government was still overseeing domain registrations back then.

Thanks for the correction! It's been years.

I remember calling an 800 number so I could give them a credit card to renew my domain.