July 2, 2008
30 Million Domains No Profit
GoDaddy manages 30 million domains—but with razor-thin margins, who’s really profiting? A closer look at domain economics and the upsell game.
From Data Center Knowledge:
Go Daddy said this week that it is now managing more than 30 million domains.
I was actually thinking about the domain registration business the other day and what the actually costs associated are. GoDaddy is charging $6.85/year (plus the $0.20 ICANN fee) for a .com domain registration. If they are paying Verisign the list price of $6.42/year per .com name registered GoDaddy is making $0.43/year per domain (a 6.7% margin).
With 30 million registered domains that is 12.9 million/year in Gross after $192.6 million/year payment to Verisign. Who’s the real winner here?
To bad there are those pesky things called merchant fees. At a best case 1-2% of the sale price for Visa/Mastercard (higher for Amex) that margin goes away really fast. Ever wonder why the GoDaddy shopping cart is so cluttered with all those up sells?