domain

Why Is GoDaddy So Cheap (For Domains)

You may wonder “How can GoDaddy offer you a .99 cent (or even cheaper domain name)?”

Since we’ve dealt with GoDaddy a few times recently, I will let you know 1) why this is possible and 2) how they make way more money from you on the other end.

Domains under $1 are a loss leader.

If you are a domain reseller (like GoDaddy or just about any other company you can buy a domain from), you can buy a domain for $8-10. Maybe if you are GoDaddy, Network Solutions, or some other large provider, maybe you can get them slightly cheaper for your bulk purchasing power. But $10 is a good general rule.

Because people/companies pay to be domain resellers (around $400/year I believe), they need to charge you a bit more than $10 to make up for paying this reseller fee, the time to help you buy the domain, etc. A company I use (Enom) charges $13.95. So Enom makes $4 on me when I buy a domain from them. This helps pay their reseller fee, their website support, and all that stuff.

What happens when GoDaddy charges 50 cents or 99 cents for a domain? They take a loss. I’ve even heard this acknowledged from someone who works there.

In the retail world, we have loss leaders. That means a product is advertised below cost to get bodies in a store (who ideally buy more things) and GoDaddy has taken this concept into the virtual world.

They make their money in the end, trust me. 

The other day, we went to buy a SSL certificate for a client (we’re making them a donation form). We bought a $12.95 cent Geotrust one from Enom to use on their site. The organization uses GoDaddy for hosting so we went to install it. Clicking on SSL certificates kept taking us back to the account page so we called up GoDaddy. This was my conversation with the guy almost verbatim:

Me: Hi, I have this SSL I just bought elsewhere and I want to install it on my site… but clicking the SSL icon keeps taking me back to the homepage for the account. Am I just not looking in the right spot?

GD Guy: No you are. You can’t install a third party SSL on a GoDaddy site, you have to buy one of our SSLs.

Me: But yours cost $69 and I bought the one I need for $12 and I want to use it.

GD Guy: Sorry, that’s not possible. What’s the refund policy on the one you just bought?

Me: I don’t want to buy something for $69 when I can have it for $12.

GD Guy: Well if you look up ‘GoDaddy coupon codes’ in your web browser, you’ll find some crazy deals. Then just buy it at least for a few years to lock it in.

Me: Umm….

So there you go. Once you enter the GoDaddy ecosystem, you are kind of stuck there. And some of their solutions seem to cost more (sometimes substantially more like in this case) than other equivalent solutions I’ve seen on the open market.

You can think of the free domain as your hotel offering you ‘free’ WIFI or your wedding photographer offering you a ‘free’ 8×10 print. It is a gesture of goodwill you are indirectly paying for anyway.

If you want to be one of those people that buys domains from GoDaddy and immediately transfers them elsewhere, be my guest. I have friends who do it! But saving $10 means taking the time to apply for the transfer, approve it, etc. so I find just buying it at the right spot works for me.

In terms of places I like to buy domains, I like enom.com and namecheap.com (note: this one is an affiliate link which means I get a portion if the money if you buy something).

So whenever you see a low price tag like Godaddy charges for domains, pause and think about why it’s so much cheaper than everything else. Reading online reviews, asking colleagues, and researching the company will tell you if it’s a deal… or something else.

Voyage Of A Domain

I think my work is insanely interesting, but I wouldn’t say people typically agree. But occasionally, I have something so random come to me that I get to do detective work and find a really interesting story.
A month ago, I got a call from Frank, who owned a domain ten years ago. On this domain was a blog about him and a crew circumnavigating the globe on a schooner. The site was originally set up to be a way for friends and family to check in on progress of the trip or for the crew to connect with people on the journey… but then it got big. When Frank told me it got millions of hits, I was really impressed… and sad to find the domain had expired.
The first question (for the actual work) was could we find his old blog posts?
But a second question showed up as we started digging: Where had this domain gone since it left Frank’s possession 5ish years ago?
The first thing to do was to go to the current website. I won’t link to the domain name because, surprise, it’s now a porn site. (If you really want to go look at it, the domain is written in the screenshots of non-porn versions of the website below. Don’t say I didn’t warn you). But what happened to this site during the time between being an innocent schooner blog and a not-so-innocent adult video website?
I decided to see what I could uncover. Knowing that a website with this traffic would have been archived by the Way Back Machine automatically, I went to web.archive.org , typed in the URL and started going back in time. Come on this fantastical journey with me…
First the domain was as schooner blog. Here is what the site looked like from 2008 to 2010:
Then it got hacked.
I know what you’re thinking: doesn’t that just look like the old website? And it does, but if we look closer at the text, we see evidence of the hack:
Further evidence of how deep this hack went happens when you click on any link on the site that isn’t the homepage:

 

Ah, remember what hacks looked like in 2013?

 

Once the domain expired and it wasn’t renewed within the 30 day grace period, it went on the market. In 2016, it was bought by someone and became a spammy looking information site about diabetes:

You may wonder why this happened. A common tactic people use to get their site ranked more quickly is to buy high traffic domains and link to their low traffic domains from them (or redirect the URLs to their websites directly) to give them a little boost. This is just my theory but it explains why 0% effort went into the design and the content seems pretty generic (i.e. like a site pretending to be a real website).
In the same year, this domain became something else even more random: a song lyric website:
I know, random! But notice the “earnings disclaimer” in the menu. Typically if you are going to put up a website that makes money off mainly display ads, it only makes real money if you are getting high traffic. And since song lyrics are a universally appealing topic and something that people frequently Google, bonus.
Then in the past year, it became a porn site. And who knows when it’ll become something else.
The great news is Frank’s blog posts are archived in the Way Back Machine and it’ll be a matter of copying and pasting to get them on his new domain. And in addition to that, now Frank and I have a fun story we didn’t expect from the experience of the domain name’s identity crisis.
The Schooner Maggie B went on an interesting journey but so did its domain name. Because the internet, like the open ocean, was built for adventure.

Three Reasons Why ‘Free Domain Name’ Works

whyadomainisfreeAs part of SquareSpace’s marketing pitch, they give away a free domain.

I find this interesting because, since they continue to advertise it, it must be working.

But allow me to let you in on a little secret.

This really isn’t a big deal. Actually it’s genius of them. Here’s why:

‘Free’ is an excellent psychological term. 

I don’t need to tell you this. We all like to feel like we are getting something for free. Am I right?

Domains cost less than $10 so giving away one to a customer that’ll give you at least ten times that is no big deal. 

When you buy a domain as a consumer, you can pay anywhere from $12/year (Enom price) to $35ish/year (Network Solutions). You’ll pay this to renew your domain name too. You can chose to renew your domain for one, two, five, any number of years. But when it’s time to renew, you’ll have to pay again to be able to keep using the domain name.

Now a company is not ever going to sell you something for less than they paid for it. That would be silly. (Note from Matt Baya: Unless this product is considered a ‘loss leader’, which is a below-price product designed to get you in a store and ideally buying more other products.)

An additional cost that consumers don’t have is also at play. To be a domain reseller, you need to pay a few hundred dollars a year. In other words, the reseller needs to make $300-$400 to keep being able to be a reseller.



A company like SquareSpace (a reseller) pays a little less than $10/domain. So if they sold it to you for $12, they’d make about $2 on you. If they sell it for $35, they make $25 on you. Once you pay back your reseller fees (and at $2/domain, it might take you awhile to get to $300), you are making money on this proposition.

But if you buy, say, a year of service at $10 a month, SquareSpace gives you a domain for free. So they make $120 and give you $10 of it. Not a big loss to them to give you this small gift. I mean if you had to give a customer something and then you know you’d make ten times that off them, you’d do it right?

They can make sure it stays renewed.

This is probably the most convenient reason to let SquareSpace (or any web host) get the domain for you, whether you pay for it or get it free.

When you register for a domain name, you do so with an email address. Before it’s up for renewal, you’ll get an email letting you know.

But what happens when you ignore it or change email addresses before it gets renewed? You can guess I am sure.

If you don’t renew your domain name, it is assumed you do not want it and suddenly, your domain name is for sale again. Best case scenario: your website is offline while you buy it back for what you paid for it. Worse case scenario: Someone buys it and makes you pay $500 (or more) to get it back. (This happened to someone I know and she had me broker the deal. Painful.)

I keep track of when my clients’ domain names are up for renewal. But some developers don’t so you should know when yours is due. Here’s how you tell.

1) Go to whois.net. Type in your domain name and press go:

whoisnet

 

2) The next screen will have information about your domain name including when it expires:

whoislookupexdate

 

So I need to renew my domain before April 15, 2014.

If a company like SquareSpace has control over your domain, they can make sure it gets renewed. The flip side of this coin is you are relying on them to do this. I usually make clients register for their own domain so they know they own it. That said, I tell them if they are comfortable they should give me access to their domain registry account so if they are off in Tahiti and their domain is expiring, I can get in there and do the renewal.

The free domain? It’s genius. It’s something that doesn’t cost SquareSpace much, it prevents the disaster of an unrenewed domain name, and the customer gets to feel warm and fuzzy about getting free.

Tell you what, if you ever become a client of mine, I’ll give you a free domain…because it’s cheaper than buying you lunch.