Important Lessons for Registries Releasing Premium Domains

Over the past year and half, many new TLD registries have launched and have now subsequently released their Premium Domains.  Though some Premium Domain releases have been adequately, most are a complete mess.  As a registrar and platform for thousands of domain name resellers, we have a unique perspective on what works and what doesn't work for registries wanting to sell more Premium Domains.

What Didn't Work:
The lack of documentation, planning, and experience coupled with the expediency that new registries operate under, led to a multitude of integration issues.  The single biggest problem resulting from these issues was the potential of selling a Premium Domain at regular registration price by mistake.  Without real-time checks whether a domain is Premium or regular, this potentially huge legal and financial pitfall was waiting to happen.  And guess what, nearly every registrar that we have been in contact with ended up in this Premium Domain nightmare.  Even HEXONET, though we pride ourselves on being highly technical, couldn't avoid this trap.  Only through understanding customers and registry partners could we mitigate the mess.

Suggestions for New Registries Considering Premium Domains:
A. Registrars are Better for Selling Premium Domains
Registrars already have existing customers and can maximize your return for the vast majority of your Premium Domains.  An Aftermarket seller may work if you are trying to sell a tiny specialized subset of unique Premium names, since the Aftermarket provider may have a targeted group of customers that match.

B. Not All Back-end Registry Operators Properly Support Premium Domains
Ensure the back-end provider properly supports real-time registrar price checks for Premium Domains.  This real-time pricing checking for Premium Domain should support price checking for transfers and renewals as well. 

C. Go Easy on the Number of Pricing Tiers. 
Registries have followed a tiered pricing model for their Premium Domains.  Some implemented three (3) simple tiers, most go with five (5) to eight (8) tiers, and a few went with 15 to 30 tiers!  From experience, anything above 10 prices tiers simply doesn't make sense.  For instance, we've seen a registry price a domain at 14,500 USD for one tier and at 14,300 USD for the next.  Honestly, If a buyer is willing to pay 14,300 USD, how likely is that they are willing to pay 14,500 USD?  Less tiers the better!

D. Choose Wisely on Pricing Strategy Between Registration Price and Renewal Price
Here are strategies HEXONET have been asked to implement:

    1. Premium purchase price, regular renewal price
    2. Premium purchase price, same Premium renewal price
    3. Premium purchase price, different Premium renewal price
    4. Premium Sunrise price, Premium renewal price for Sunrise domains

From experience and customer feedback, choice #1 above, a Premium purchase price and standard renewal price works best.  K.I.S.S. - Keep It Simple Stupid - is the best route to go.  From the customer's perspective, it is understandable and predictable, imagine having to keep track of multiple renewal prices for the same extension every year.  This model also promotes customers to place pre-orders for Premium Domains at multiple registrars, since they know they can always transfer the domain to their registrar of choice (home registrar) after obtaining it.  From the registrar's perspective, it is the easiest to implement.  Domain transfers between registrars and renewals are not a problem as these are priced at the standard rate.

Option number #2 is less favorable.  More complexity to implement and maintain for registrars, especially when it comes to domain transfers and renewals.  Consider if registrar A supports Premium Domain transfers for your TLD, but registrar B doesn't support Premium Domain transfers for your TLD?  This might cause a pricing problem upon transfer or may even block the transfer altogether.  If registrar B is the home registrar for a registrant, your TLD loses credibility and may create negative commentary on social media.

Option number #3 is the least desirable.  For registrars and registrants, it is too complex and a nightmare to maintain.  This model even restricts Premium Domains into their own renewal pricing tiers, which is a big no for everyone!

HEXONET is Willing to Help:
If you are interested in learning more, please feel free to reach out to HEXONET and we will be happy to discuss Premium Domains with you.