Pricing the names under your TLD

An operator who runs a sector word as a namespace, say .yoursector, has one commercial decision that nobody else can take: what a name under it costs. The registry does not fix that number. The holder of the TLD does, and the holder may give different names different prices. That freedom is wide, and the easy mistake is to ignore it: pick one round number for every name and open the doors.

A single price is a decision too, and usually a poor one. It charges the same for a string of random characters under .yoursector as for the one word every firm in the sector would recognize. It gives a trade body no way to welcome its members, and it gives a speculator the same terms as a practitioner. A price list with a little structure solves these problems before they appear, provided the structure rests on rules you can state in a sentence.

This article is for the operator who has to write that price list. It covers what you control and what you do not, how price shapes the population of a namespace, how to build tiers, how to choose premium names without doing harm, when a price of zero is the right price, and what a three-tier list produces in a worked example with stated assumptions.

What an operator of a market TLD controls when setting prices

Start with the mechanics, because they set the limits of everything else. On Freename, a TLD exists as a token sitting in a wallet, and the wallet that holds it is the only party able to issue names beneath it. Nobody manages the TLD on the holder’s behalf. If you operate .yoursector, you are the holder, or you act through the holder.

Two pricing powers follow from the registry’s design. You decide what a name costs. You may also decide that one name costs more or less than another. A price list is therefore a design, not a setting.

The income side has its own rules. Freename operates a royalty program under which a TLD holder is paid part of the fee each time a name is registered under that TLD. The registry advertises that part as reaching up to half. The actual share depends on the registry’s terms in force and on its activation conditions, so read them before you build a forecast. Taking part in the program also carries a yearly cost that the registry sets. A TLD itself has no yearly renewal fee, which is a separate matter and should not be confused with the cost of the program.

Three things sit outside your control, and a sound price list respects all three:

• The registry’s terms. They can change, and your share and your costs change with them.
• Where names resolve. Onchain names live outside the DNS, so an ordinary browser will not open one unaided. Support exists in certain wallets and through a browser extension, and it is partial.
• Demand. You may find no comparable price list to lean on. Your first prices are hypotheses.

How a price list selects the registrants of a namespace

Before a price earns anything, it sorts people. Each level of price admits a different population, and the population is what gives a sector namespace its meaning.

A very low price admits everyone. That sounds generous, and for some namespaces it is the right choice. It also admits people with no connection to the sector, who register names in bulk because the cost of being wrong is small. A namespace filled that way stops telling the reader anything. If name.yoursector could belong to anyone at all, the suffix carries no information about the party behind it.

A higher price filters. A practitioner who intends to use a name for years will pay a meaningful fee once. A party registering forty names on a guess will not. Price is a blunt filter, though. It keeps out the small practitioner along with the speculator, and it does nothing to stop a well-funded party from registering names it has no business holding. Where the identity of registrants matters, price supports an issuance policy and never replaces one.

A price of zero, offered to a defined group, does something different again. It turns the name into a benefit of belonging. The filter is then membership, checked by you, and the price plays no selecting role at all.

So the first question is not what the market will bear. It is who you want under the TLD in three years. Write the answer down in one sentence. A namespace for licensed practitioners, a namespace for any business in the sector, and a namespace for hobbyists and enthusiasts lead to three different price lists, and each can be correct.

Building tiers for .yoursector that you can explain in one sentence

Tiers are the usual answer to the fact that names differ in value. The test of a good tier structure is simple. A registrant who asks why a name costs what it costs should get an answer in one sentence, and the same answer should apply to every other name in that tier.

Three tiers are enough for most sector namespaces. More than that, and you spend your time explaining boundaries.

Each tier needs a rule that a machine could apply. “Short” must mean a number of characters. “Descriptive” must mean membership of a word list you have written and can show. A tier defined by judgment, name by name, will be attacked as arbitrary the first time two similar names carry different prices.

Where to put the boundaries

Set the standard tier first, because most of your registrants will meet only that price. It should be low enough that an eligible practitioner does not hesitate and high enough that registering fifty names on a guess is a real expense. Those two conditions pull in opposite directions, and the gap between them is where your standard price lives.

The select tier exists for names that are scarce by construction. There are few names of three or four characters, and few single words that describe a service in the sector. Scarcity that anyone can verify is a fair basis for a higher price.

The premium tier is different in kind. It is a closed set you compile by hand before opening. Keep it small. A premium tier with hundreds of names is a sign that the operator is pricing hopes.

Choosing premium names without pricing someone else’s brand

The premium tier is where an operator’s judgment is most exposed. A name is premium because of what the word means in the sector, taken on its own. The word for the core activity of the sector, the word for its main product category, the word for the place its practitioners gather: these are generic terms, valuable to many possible registrants, and scarce because there is one of each.

A workable set of criteria:

1. The word is generic in the sector, meaning that many unrelated parties could legitimately use it.
2. It is short and spelled the way practitioners spell it.
3. It would be understood without explanation by someone outside your project.
4. You can say which kind of registrant you would want to hold it, without naming one.

The fourth criterion is the safeguard. If the only plausible registrant for a name is one particular organization, because the name is that organization’s brand, the name does not belong in a price tier at all. It belongs on the set of names you hold back from registration, a topic with its own procedure that we leave aside here. Putting a high price on a name that matches an established mark invites the reading that you are charging the mark’s owner for its own name. Trademark rules differ from country to country and your own counsel decides how they apply to you, but the commercial judgment is the same everywhere: a sector namespace gains nothing from that quarrel.

Free names for members: when a price of zero is the right price

Some operators are not selling names. A trade association, a professional body or a cooperative that runs .yoursector may want every member to hold a name under it as part of membership. The power to price names differently includes the power to charge nothing to a defined group.

A free name has real costs, and you should count them before promising one.

It produces no royalty. The program pays a share of a registration fee, and a share of no fee is nothing. A namespace issued mostly free to members is a membership service, and its budget belongs with member services, not with revenue.

It still has to be issued, and because issuance rests with the holder alone, every member name passes through you. Plan the work: checking that the applicant is a member, agreeing the name, issuing it to the wallet the member gives you, and answering questions from members who have never held a wallet.

It needs limits. Decide how many names a member receives at no charge. One is the simple answer, with further names at the standard price. Decide which names are available free. A member name is normally the member’s own trading or personal name, not a generic word from the select or premium tiers.

It raises the question of what happens when membership ends. Whether a holder can withdraw or alter a name after it has been issued depends on the case and on the registry’s terms. Do not assume that you can. Write your membership terms on the footing that an issued name may stay with the former member, and decide whether that is acceptable before you issue the first one.

The three common models compare as follows.

A worked example: three tiers and a thousand names

The following is an illustration. Every figure in it is an assumption chosen to show how the arithmetic behaves. None is a forecast, a market observation or a recommended price.

The assumptions:

• The operator of .yoursector sets three registration prices: USD 10 for the standard tier, USD 60 for the select tier and USD 400 for the premium tier.
• Over the period considered, registrants take 900 standard names, 90 select names and 10 premium names. That is 1,000 names in all.
• The holder’s royalty share is taken at half of each registration fee, which is the maximum the registry advertises. The share that applies to you depends on the registry’s terms and activation conditions.
• Only registrations are counted. Nothing is assumed about any later fee.
• The annual cost of taking part in the royalty program is not included.
• No names are issued free in this example.

Gross registration fees per tier are the price multiplied by the count: USD 9,000 for the standard tier, USD 5,400 for the select tier and USD 4,000 for the premium tier. The total is USD 18,400.

Standard, 900 namesUSD 9,000

Select, 90 namesUSD 5,400

Premium, 10 namesUSD 4,000

Illustration built on stated assumptions. Registrations only. Figures are gross fees before the holder's share is applied; the annual cost of the royalty program is not included.

At the assumed share of half, the holder’s royalty would be USD 4,500 from the standard tier, USD 2,700 from the select tier and USD 2,000 from the premium tier, which makes USD 9,200 in total. The program’s annual cost must still be deducted from that figure, and this example does not state it.

Two observations come out of these numbers.

First, the tiers contribute far more evenly than the counts suggest. Standard names are nine in ten of all names and bring in a little under half of the fees. Premium names are one in a hundred of all names and bring in a little over a fifth. A price list with tiers spreads income across kinds of registrant, so that no single group carries the namespace.

Second, the premium tier is fragile. Ten names carry USD 4,000 of the total. If only five of them find a registrant, the figure falls by half, and nothing in the other tiers makes up for it.

Reading the example as an operator and not as a forecast

The purpose of an example like this is to test your own list, by changing one assumption at a time and watching what moves.

Take the premium tier away entirely. If none of the ten premium names is registered, gross fees fall from USD 18,400 to USD 14,400, and the holder’s share at half falls from USD 9,200 to USD 7,200. The namespace still works. This is the case to plan for, because a premium name can wait a long time for the right registrant, and a namespace whose budget depends on them is under pressure to discount.

Now halve the standard count instead, to 450 names, with the other tiers unchanged. Gross fees come to USD 13,900 and the holder’s share at half to USD 6,950. That fall is larger than the loss of the whole premium tier. In this example, then, the standard tier is the one that matters most for income, and it is also the one that matters most for the life of the namespace, since it holds nearly all the registrants.

The table carries the same limits as the base case: registrations only, the share assumed at the advertised maximum, and the program’s annual cost left out.

Then question the share itself. Half is the ceiling the registry advertises. If the terms that apply to your TLD give a lower share, every figure in the right-hand column falls in proportion, while the left-hand column does not move. Run your own plan at the share you have confirmed, not at the ceiling.

Finally, set the result against your costs. The program has its annual cost. Your time issuing names, checking eligibility and answering registrants has a cost. If a plausible low case does not cover them, the price list is not the problem to fix first. The reason for anyone to hold a name under your TLD is. The site’s Subname Revenue Calculator estimates revenue from names issued under a TLD, from figures of your own.

What a name under your TLD does, and how that caps the price

A registrant pays for what a name does. An honest price list starts from what a name under your TLD does in practice, and that is narrower than what a DNS domain does.

A name under an onchain TLD can stand in for a wallet address in wallets that support the registry, so that a client pays name.yoursector and not a long string of characters. It can point to a website published to IPFS, reachable in browsers that have the necessary support. It can carry records that identify the party behind it. The page on what is live sets out each capability with its source, and the page on names in wallets covers where resolution works.

It does not open in an ordinary browser unaided. It does not carry ordinary email, which depends on the DNS. Support in wallets and browsers is partial and changes over time. For a public website that any visitor must reach from any device, a DNS domain is simply the better tool, and you should say so to a registrant who asks.

This has two consequences for pricing.

The first is a ceiling. Do not price a name as if it were a DNS domain with universal reach. A registrant who discovers the limits after paying will not register a second name and will tell colleagues. State on the page that shows your prices where the names resolve, in plain words.

The second is a direction. The value of a name under your TLD grows with what you make it useful for. If members of the sector can be paid at their name, verified by their name and found by their name, the standard price is easy to justify. If the name does nothing yet, no amount of tier design will sell it. Work on usefulness and work on price belong in the same plan, and the Launch Roadmap tool is one way to sequence them.

Changing prices after registrations have opened

Your first price list will be wrong somewhere. The question is how to correct it without breaking faith with the people who registered early.

Raising a price is the easier change. Registrants who paid less are pleased, and new registrants see only the current list. Give notice of the change and of the date it takes effect, so that nobody feels ambushed and so that the notice does not become a device for pushing people to register in a hurry. A plain statement is enough.

Lowering a price is harder. Those who paid the higher price ask why. There are fair answers: the earlier registrants had first choice of names, which has a value of its own. Give that answer in advance, in your terms, not afterwards. If you expect to lower the standard price once the namespace is established, it is better to open at the lower price and avoid the question.

Moving a name between tiers needs the most care. An unregistered name can be moved from select to premium if the rule that defines the tiers changed and the change is published. Moving a single name because someone asked about it is the behavior the one-sentence test exists to prevent.

The procedure below puts the work in order.

1. State who the namespace is forOne sentence naming the registrants you want. Every later choice is tested against it.
2. Confirm the registry's termsEstablish the royalty share that applies to your TLD, the activation conditions and the annual cost of the program before you model anything.
3. Define each tier by a ruleA character count, a published word set or a closed set of premium names. No tier rests on case-by-case judgment.
4. Set the standard price firstLow enough for an eligible practitioner, high enough to make bulk registration a real expense. Then set the tiers above it.
5. Decide the member termsFree, reduced or the same price, how many names per member, and what you assume about a name once membership ends.
6. Run a low caseModel the plan with no premium names registered and a reduced standard count, at the share you confirmed, against your costs.
7. Publish the list and the review dateShow every price, say where names resolve, and state when you will review the list and how notice of a change is given.

Putting your price list on one page before you open

The practical next step is small and specific. Write the whole price list on a single page before any name is issued. The page should hold the sentence that says who the namespace is for, the rule and the price for each tier, the closed set of premium names with their prices, the member terms, a statement of where names resolve, and the date of the first review. If any of those items takes more than a few lines, the rule behind it is not yet clear enough.

Then give the page to two people who know the sector and were not involved in writing it. Ask each to price five names of their choosing using only the page. If they reach the prices you intended, the list is ready. If they do not, the tiers still depend on your judgment, and registrants will find the same gaps.

If the question behind your price list is acquiring a sector TLD to run as a namespace, or selling one, that is the work of Hush Partners, a private desk for onchain TLDs. The page for operators describes it, and post-transfer activation covers putting a TLD to work once it has been transferred. A standard mutual NDA applies to each exchange, and the desk is reached through the contact form.

Questions people ask

Can two registrants be charged different prices for similar names?

The registry lets a holder price names differently, so the mechanism allows it. Whether it is wise is another matter. Two similar names at different prices need a published rule that explains the difference, such as length or membership status. Consumer and competition rules may also bear on differential pricing in some countries, and your own counsel decides how they apply to you.

How is income from registrations treated for tax?

That depends on where you are established, on the legal form of the holder and on how the payment reaches you. Rules on indirect taxes, on income recognition and on payments received as digital assets differ from one country to another. Treat this as a question for your accountant before the first registration, and keep a record of each registration and of each amount received.

Should premium names carry a fixed price or a price on request?

A fixed price shown next to each name is fairer and simpler: every inquirer sees the same figure. A price on request gives you room and costs you trust. If you do quote on request, quote the same figure to everyone who asks about the same name.