(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.
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.
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)
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.
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.
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.
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
Thank you to Phil Corwin of ICA for letter in advance of decision!
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.
@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.
George K,
how much did you save?
99 USD?:)
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.
I cheated and saw your #’s via domainWeSpyUformoney .co ..sorry meant domaintools .com…
I know you are frugal while a “Quality* vs Quantity” kind of guy…
Cheers.
Domo
*Understatement