How much does it cost to run an ICANN Registrar?
Perhaps you are a brand owner with a large portfolio of defensive registrations. Or, you are a domainer looking for greater control and lower expenses? You wonder what would it cost to run a single-registrant registrar?
Here is a simple formula to determine the portfolio size you should have before considering becoming your own ICANN Registrar. You will need to repeat this formula for each of the different TLD’s that you own domain names in.
Mx = I + Px.
M = the markup you currently pay your registrar
x = the number of domains in a particular TLD.
P = the per domain name fees you pay ICANN and your Registrar Service Provider
I = the annual ICANN and miscellaneous fees
Some assumptions about the fixed and variable fees:
1. Annual Fixed Fees of $11,000
- The annual ICANN accreditation fees are about $8500/year. This includes a $4000 fixed annual fee and variable fees of about $1125/quarter.
- Business Insurance. ICANN requires that you have Commercial General Liability Insurance coverage of at least $500,000. This coverage must be maintained in force throughout the term of your accreditation. Let’s say $350/year.
- Business Incorporation. Necessary to protect your personal assets from lawsuits. Let’s say $500 for initial setup and $500 per year for annual reports and franchise fees even if you report a loss every year.
- Data escrow fee $1000/year (paid to Registrar Service Provider)
- SSL Digital Certificate for Registry communications. Let’s say $350/year
- Add $300 to round up to $11,000
2. Variable Domain Name Fees: $0.50
Expect to pay ICANN $.20 per year per domain. Assume a Registrar Service Provider charges another $0.30 per year per domain. The Registrar Service Provider should provide your required Public Whois and data escrow to ICANN (for a fixed annual fee). Note: Registrar Service providers may not support all of the TLD’s you require.
Not included in this analysis:
- The ICANN Application fee of $2500
- Working capital. ICANN requires US$70,000 as a working capital requirement. This does not need to be paid to ICANN. ICANN requires only that you demonstrate (by submitting an independently verified financial statement) that you have at least this much liquid capital (cash or credit) before your ICANN accreditation becomes effective.
- Also, registry fees must be pre-paid in order to registrar, renew and transfer domain names to your new registrar. Expect to deposit a month or two worth of renewals with each registry you own domains for. So, if you have 10,000 domains with a wholesale cost of $7/year, a month of pre-paid renewal fees is about $6000.
- Salaries for yourself or others. After all, you are not generating any income solely from operating a registrar unless you charge yourself a markup. The value of your time is zero. You do this for free or you are already being paid by someone to manage domains.
- Fees for DNS or nameservers (you use a parking service)
- The cost of maintaining a business office (rent, furniture, equipment), merchant credit card processing (for other paying registrants) and website development.
- Legal and accounting fees
For an example, let’s assume the following:
- you own only .com, .net and .org domain names
- you pay an average markup of $3 per domain (for greater precision, calculate each TLD separately)
- you pay variable domain name fees of $0.50
- you pay fixed annual fees of $11,000 (ICANN fees of $8500 plus miscellaneous fees of $2500)
Mx = I + Px
3x = 11000 + 0.5x
2.5x = 11000
X = 4400 names required to break-even on cost of owning own Registrar.
Of course there are other factors to consider besides costs listed here. Do you have the time to manage this? What are the opportunity costs for projects that you could otherwise be spending your time on? If you own domains in a lot of different TLD’s, good luck finding a Registrar Service Provider that supports them all.
Let me know if you spot any issues with this model or would suggest some refinements.