How to Start a Domain Registration Business

In today’s digital landscape, businesses, entrepreneurs, and individuals continually seek to establish their presence online; this widespread demand for websites has spurred a lucrative opportunity for aspiring entrepreneurs: domain registration services.

As a domain registrar, you’ll help clients secure unique web addresses, manage domain renewals, and protect their digital brands; you’ll also be responsible for providing customer support, ensuring data security, and offering additional services such as email hosting and/or website-building tools.

In this comprehensive guide, we’ll walk you through all the essential steps you’ll need to take to start your own domain registration business, from obtaining the necessary accreditations and setting up a user-friendly platform to establishing a reliable system for managing domains and developing a marketing strategy to attract customers.

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Industry Overview

The domain name registrar market is poised for steady growth, with the industry valued at USD $2.35 billion in 2023 and projected to reach USD $3.47 billion by 2032, expanding at a compound annual growth rate (CAGR) of 4.43%.

One of the main reasons behind this growth is the expansion of e-commerce, which has driven businesses across sectors to prioritize a strong online presence, thereby increasing the demand for domain registration services.

Another factor contributing to this trend is the rise in internet connectivity across emerging markets, leading to a surge in new users and businesses establishing themselves online.

Startup Costs

If you’re considering whether a domain registration business is right for you, the first thing you’ll need to know is whether it’s a) affordable, and b) worth the investment. I mean, how much can you actually make running your own domain registration business?

Well, it depends; the initial investment for a domain registration business varies widely based on factors such as the scale of your operations, the specific services you plan to offer, and the marketing approach you intend to use.

Below we’ve broken down a few of the most common startup costs you’ll likely need to be aware of:

• ICANN Accreditation ($3,500 Initially): To operate as an official domain registrar, you’ll need accreditation from ICANN (Internet Corporation for Assigned Names and Numbers), the global authority overseeing domain names. This accreditation will serve as your license to enter the industry and will need to be renewed on an annual basis.
• Software and Platform Development ($10,000 – $50,000): You will need to create a comprehensive platform that allows customers to search, register, and manage domain names. This process involves custom software development, integration with domain registries, and thoughtful user interface design, with costs depending on the feature complexity and degree of customization desired.
• Domain Registry Fees ($10,000 – $50,000+): Separate from ICANN, you will need to partner with individual registry operators who manage specific top-level domains. For example, Verisign is the registry operator for .com and .net, and partnering with them requires an initial security deposit, minimum quarterly registration commitments, as well as per-domain fees (currently around $10.26 per .com domain as of 2024).
• Marketing and Advertising ($30,000-$50,000): You will need to develop a comprehensive marketing strategy to compete in the highly saturated domain registration market. This will likely involve a mix of search engine marketing (SEM) focused on competitive keywords ($5 to 20 per click), targeted social media campaigns, content marketing to boost SEO, and establishing strategic partnerships with web hosting providers and developers to expand your reach and attract potential customers.
• Staffing ($50,000 – $150,000+ Annually): You will need to hire a variety of personnel for your company’s operations, with costs varying significantly based on your service model (in-house vs. outsourced), coverage hours (business hours vs. 24/7), and the levels of support you’ll provide (basic versus tiered support options).
• Legal Compliance and Licensing ($5,000 – $10,000+): Besides securing the necessary licenses and permits for your domain registration business, you will also need to address various legal requirements. These may include developing privacy policies, crafting terms of service, ensuring GDPR compliance, and establishing procedures for domain disputes.

Note: If you plan to offer additional features such as SSL certificates, DNS management tools, or site migration support, these add-ons will require their own infrastructure and may involve additional licensing or software costs.

Earning Potential

The earning potential for a domain registration business is promising, though it is heavily reliant on scale; without growing a substantial customer base, generating meaningful revenue isn’t feasible.

This is primarily because, contrary to what you might expect, domain registration businesses don’t make significant profits from initial registrations, as the margin on new domains is relatively low — typically around $2 to $5 per .com domain.

Instead, profitability comes from the long-term revenue generated through renewals; with average retention rates typically ranging between 70% and 85%, most customers continue renewing their domains year after year, creating a steady and compounding income stream.

Simply put, you may need to spend $5 in marketing to acquire a customer who brings in $4 from an initial registration; however, that same customer is likely to bring in $4 each year for the next five years, making them highly profitable long-term.

And that’s without even factoring in add-ons, such as website privacy protection, which most domain registration businesses charge at least a 50% markup on.

That said, early on, marketing expenses will be significant as you work to build a substantial customer base, and until you have enough recurring renewals to offset acquisition costs, it’s likely that you will need to operate at a loss.

6 Steps to Starting a Domain Registration Business

In order to start a domain registration business, you’ll need to complete the following steps:

1. Planning Your Domain Registration Business
2. Registering Your Business
3. Securing Funding (If Applicable)
4. Opening a Business Bank Account and Credit Card
5. Getting all Applicable Licenses and Permits
6. Obtaining Business Insurance

We’ve broken each one of these down in more detail below.

Still exploring your options? Check out other small business ideas.

Step 1: Plan Your Domain Registration Business

Before diving into your domain registration business, you’ll need to spend some time conducting thorough market research.

This will involve analyzing the demand for popular domain extensions, understanding industry pricing trends, and evaluating the specific appeal of extensions like .com, .net, and newer options to pinpoint which ones customers are most likely to choose.

You’ll also need to examine the client acquisition strategies of your competitors and assess their associated costs, as well as determine how you will position yourself to compete effectively.

This will help you evaluate the financial viability of your project — including projected revenues and expenses —as well as set realistic targets for profitability and growth.

Finding a Suitable Name

Choosing the right business name is both important and challenging.

This is because your name will need to be eye-catching, memorable, and (at least somewhat) related to your industry.

If you don’t already have a name in mind and need help, you can visit our How to Name a Business guide or use our free Business Name Generator tool.

If you do have a name in mind, we recommend researching the following:

• Your state’s business records
• Federal and state trademark records
• Social media platforms

You will also need to make sure that your business’s name is available as a domain — this is your website’s URL address.

Note: If you’re planning to operate a sole proprietorship, you might want to operate under a business name other than your own name — known as a “Doing Business As” (DBA) name. Keep in mind that this is not recommended for a domain registration business.

Choosing Your Domain Registration Model

Even though most new domain registration businesses opt to start as ICANN-accredited registrars, there is also the option to begin as a reseller on the secondary market.

Operating as a reseller will allow you to bypass the ICANN accreditation process and its associated fees, providing a simpler, lower-cost entry into the market.

Having said that, operating as a reseller means you’ll be purchasing domain registrations from an ICANN-accredited registrar at a much higher price than if you were a registrar yourself, which can make it challenging to remain competitive.

A common strategy some businesses employ to lower costs is to start as resellers in order to fine-tune their marketing strategy and, once they consistently see results, transition to ICANN to operate independently and secure lower pricing.

Creating a Detailed Business Plan

A detailed business plan is essential for outlining your business strategy, securing funding, and mapping out your domain registration business’s path to growth and profitability.

When drafting one, be sure to include an executive summary, market analysis, organizational structure, content strategy, marketing strategy, and financial projections.

Remember to include as many relevant data points, research insights, and concrete examples as possible to support your claims and demonstrate the viability of your business model.

The more comprehensive and data-driven your plan, the better equipped you’ll be to make informed decisions and attract potential investors.

For more information on this step, you can have a look at our How to Write a Business Plan guide.

Step 2: Register Your Business

One important aspect that cannot be overlooked when starting your domain registration business is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs.

This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.

In practice, this means that if your domain registration business were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.

Note: If you’re interested in more information before getting started, we recommend having a look at our How to Start a Business guide (DIY) or our in-depth Best Business Formation Services review (for those opting for a professional service).

Step 3: Secure Funding (If Applicable)

Nearly every business, especially in the early stages, will require some level of financing to get off the ground, with the most common options available being:

• Small Business Administration (SBA) loans
• Traditional bank loans
• Private investors
• Angel investors
• Crowdfunding campaigns

That said, you should never borrow against your business without knowing exactly how much additional revenue it will generate, meaning any debt you take on should be productive debt (that directly contributes to growth and profitability).

Step 4: Open a Business Bank Account and Credit Card

Using dedicated business banking and credit accounts is essential when operating as a business owner; this is because when your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) can be at risk in the event your business is sued.

In business law, this is referred to as piercing your corporate veil and is a result of the fact that not having a separate business bank account can be interpreted by some courts as evidence that you are not treating your business as a separate financial entity.

As a result, you could lose your limited liability protections even if you’ve registered a separate business such as an LLC or C Corp.

There are also a variety of practical and economic benefits to this step, such as a larger access to business loans and a more legitimate look.

Getting a business credit card can also be a great idea as it can help you build your company’s credit history from the start.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Step 5: Secure All Required Licenses And Permits

The applicable licenses and permits that you’ll need will largely depend on your state and local regulations.

Even so, we’ve compiled a list of some of the common licensing regulations that you’ll likely need to satisfy in order to operate legitimately.

Business Operation Licenses

At a state level, your business may be required to obtain a business license in order to operate — though this will depend on your location.

This process generally involves submitting an application, paying a fee, and meeting specific state requirements.

Home Occupation Permit

If you plan to manage your domain registration business from your home, you may need to obtain a home occupation permit.

This can be especially beneficial in the early stages of your business, helping to keep costs low while allowing you to focus on growing your customer base and refining your services.

This permit can typically be obtained through your local zoning or planning department, though the specific requirements and fees may vary depending on your location.

Note: If you intend to operate your business under a name that reflects your brand rather than your LLC’s or your own legal name, you’ll also need to file for a DBA (Doing Business As) name with your local or state government.

Step 6: Secure Business Insurance

In addition to securing the necessary permits and licenses, you will need to obtain the right business insurance.

Note

Even if you form an LLC, purchasing business insurance is still a good idea. This is because an LLC structure protects your personal assets, not your business’s.

Even though the exact coverage will depend on your individual circumstances and the specific structure of your business, most domain registration businesses will primarily need to consider two types of insurance:

Professional Liability Insurance (Errors & Omissions Insurance)

Professional liability insurance is a foundational coverage for domain registration businesses, as it protects against claims arising from mistakes, negligence, or failure to deliver services as promised.

For example, if a customer loses their domain registration due to a technical glitch that results in incorrect domain allocation, professional liability insurance would help cover legal fees and any settlements if they file a claim against your business for damages.

The cost of this coverage varies greatly based on factors such as the size of your business, the level of coverage you choose, and your claims history, but it is typically in the range of $500 to $2,000 per year for a small domain registration business.

Cyber Liability Insurance

Cyber liability insurance is another foundational coverage for domain registration businesses as it protects from the financial impact of data breaches, cyberattacks, and loss of digital information.

This coverage helps cover the costs associated with data recovery, legal fees, and notifying affected parties, ensuring that your business can respond effectively if a cyber attack incident occurs.

The cost for CLI typically ranges anywhere between $800 and $2,000 annually depending on the size and complexity of your business operations.

Ready to Get Started?

How to Start an Domain Registration Business FAQs

How do you start your own domain registrar?

To start your own domain registrar, you will need to obtain ICANN accreditation, set up a user-friendly platform for domain management, and secure all the necessary licenses and permits.

You will also need to develop a successful marketing strategy to attract customers and establish partnerships with domain registries to ensure access to a variety of domain extensions for your clients.

How profitable is the domain registration business?

The domain registration business can be quite profitable, particularly due to the recurring revenue from domain renewals.

That said, building a substantial customer base will take time, and it is likely that new registrars will initially operate at a loss while they refine their marketing strategies to effectively attract and retain customers.

Is domain selling easy?

No, domain selling definitely isn’t easy, and you shouldn’t see it as a quick way to make money.

Starting a successful domain registration business will require a significant financial investment, robust technical infrastructure, industry accreditations such as ICANN, and ongoing marketing expenses to effectively attract and retain customers.

How much is the ICANN fee?

To become an ICANN-accredited domain registrar, you will need to pay a non-refundable application fee of $3,500.

Upon approval, an annual accreditation fee of $4,000 will be required, which can be paid in quarterly installments of $1,000 each.