UPDATED: Mike Mann Just Saved Almost $2 Million Dollars With Verisign’s No Rate Increase .Com Contract

(George Kirikos just pointed out that I did not take into account the compouding of the Verisign rate increase and he is correct so I have correct the math and the numbers)

Mike Mann owns around 330,000 domain names.

Based on Verisign’s contract  renewal to operate the .Com registry over the next six years, without being able to raise their prices 7% in 4 out of 6 years, according to our calculation Mike Mann just saved almost $2 Million dollars.

The current rate for a .Com registration or renewal is $7.85

Here is what the annual increase would have amounted to if Verisign would have been allowed to increase the wholesale price, the amount of the (increase) and the annual savings to Mike now that the price is locked in at $7.85:

Year 1 increase: $8.40 (.55)   $181,500

Year 2 Increase $8.99 (1.14)    $376,200

Year 3 Increase $9.62 (1.77)    $584,100

Year 4 Increase $10.29 (2.44)    $805,000

Here is the savings that every domain holder will receive for each 1,000 domains they own:

Year 1 $550

Year 2 $1,114

Year 3 $1,777

Year 4 $2,44o

Total savings over the 4 years is:

Total savings = $0.55 + $1.14 + $1.77 + $2.44 = $5.90

So for every 1,000 domains owned domain holders just saved $5,900

We at MostWantedDomains.com just saved over $400,000.

All domainers should celebrate this early Christmas present and consider sending a small percentage of their savings over to the Internet Commerce Association which is the only group to publicly weigh in on behalf of .com registrants demanding that Commerce and Justice not renew the contract with the  automatic price increases.

Comments

  1. says

    Actually, the math above UNDERSTATES the savings, because compounding of the savings was not included:

    Consider 1000 domains. Under flat pricing, the cost per year is $7,850. Over 4 years, that’s $31,400.

    Now, suppose the prices are instead $8.40, $8.99, $9.62, and $10.29. So, the math is:

    Year 1 = $8.40 x 1000 = $8,400
    Year 2 = $8.99 x 1000 = $8,990
    Year 3 = $9.62 x 1000 = $9,620
    Year 4 = $10.29 x 1000 = $10,290

    Total = $37,300

    Savings = $37,300 – $31,400 = $5,900.

    So, for every domain name, that’s $5.90 being saved over the next 4 years.

    For someone with 330,000 dot-com domains, that’s a total savings of $1,947,000 over 4 years.

  2. says

    Fixing that table:

    Year Price (7% contract) Price (0% contract) Savings
    ————————————————————————
    1 $8.40 $7.85 $0.55
    2 $8.99 $7.85 $1.14
    3 $9.62 $7.85 $1.77
    4 $10.29 $7.85 $2.44

    Total savings = $0.55 + $1.14 + $1.77 + $2.44 = $5.90 (same as before)

  3. says

    Good work, George. You saved me a post.

    It feels like a Geico commercial. I just saved at least $41,300 over the next 4 years (assuming I don’t accumulate more than what I have now). That’s more than what I paid for CRMSoftware.com. It’s like getting a heavyweight domain for free today.

  4. says

    To be strictly accurate, the “rules” are that the 7% increase is the maximum, so it turns out that when you start with $7.85, you ALWAYS round down (never up). So, the prices over the 4 years are actually:

    Year 1: $8.39
    Year 2: $8.97
    Year 3: $9.59
    Year 4: $10.26

    Total = $37.21
    Savings = $37.21 – 4 x $7.85 = $5.81 per domain.

    $5.81 vs. $5.90 — it turns out the rounding would have worked against VeriSign every year. :)

    Taking things further, doing it with the accurate numbers above, the schedule over all 6 years would have been:

    Year 1: $8.39
    Year 2: $8.97
    Year 3: $9.59
    Year 4: $10.26
    Year 5: $10.26
    Year 6: $10.26

    Total = $57.73 – 6 x $7.85 = $10.63 per domain over the 6 years

    Note that it’s OPTIMAL to front-load all price increases (i.e. if you could only raise it 4 out of every 6 years, make sure you raise it in the first 4 years,).

    $10.63 multipled by 100 million domain names exceeds a billion dollars. That helps explain why VRSN stock is down so much.

    For bonus points, calculate the savings to consumers if there was a competitive tender, and prices went down to $2/yr. That’s the $500 million/yr+ that consumers SHOULD be entitled to, and that we continue to see going into VeriSign’s pockets.

  5. says

    Kudos to George Kirikos for the breakdown of savings. Indeed, the r*ping of consumers have been going on without control. It’s the downside of all monopolistic markets, where things work under “contracts”. Remember the days of Network Solutions? If it weren’t for competition, we’d still be paying $50 per domain.

  6. says

    George

    “”Note that it’s OPTIMAL to front-load all price increases (i.e. if you could only raise it 4 out of every 6 years, make sure you raise it in the first 4 years,).””

    I agree but that is not what Verisign did under the old contract so I don’t think you can assume they would have done it under the new contract

  7. Paul says

    The really great news is those savings will be passed on to consumers. You know, folks who are forced to pay $100,000 for a domain someone else is just sitting on.

    In that light, I’m so glad domainers won’t have to pay another couple of bucks per domain. It warms the heart.

    I also agree with Acro. It’s a terrible thing for consumers when monopolistic markets emerge. No wait… that’s what .com domainers want. I stand corrected.

  8. says

    @Paul

    I understand your sentiment, but buyers of domain names
    are not “consumers”, they are end users; business people who
    are, like the ‘domainer’, looking to make a profit.

    These business people are also not “forced” to buy anything,
    and next year (due to the upcoming gTLDs) they will have a
    great deal more choice in terms of the online identity they
    will, or could, assume.

  9. says

    Domo: Directly, and indirectly through my companies, there are roughly 500 domains, so that’s a total “savings” on the order of $5K over 6 years, compared to the contracts with the automatic price increases.

    However, when compared to a tender of the .com contract, where prices should go down by $5/yr per domain (to below $3/yr wholesale price to registrars), we’re still paying $2,500/yr more than we should be — over 6 years, that’s $15K more that we should be saving. For the public, with over 100 million dot-com domains, that’s $500 million/yr, or $3 billion over 6 years that we’re still collectively being overcharged.

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