When to become an ICANN Accredited Registrar

5 min readAug 7, 2017

What is ICANN?

The Internet Corporation for Assigned Names and Numbers (ICANN) was established back in 1998 as a non-profit organization responsible for the management of the domain name system (DNS).

Since it formulates and imposes Internet domain policies, rules, and regulations, ICANN plays a crucial role in the operation and maintenance of the Internet. In other words, ICANN oversees the internet. ICANN is responsible for the operation of root name servers, dealing with registries to manage top level domains, and the distribution of IP addresses.

What is ICANN Accreditation?

Within the framework of ICANN are Registry and Registrar accreditations. An accredited registry is a company, which has been found to be in various aspects, competent to run a registry business. Examples of these are .com, .net, .org, .info, .biz, etc. These companies sign agreements with ICANN essentially promising to abide by the rules and framework established by ICANN for running and maintaining the top management for a particular domain name.

When a registry is established it essentially is a monopoly for a particular domain name. Because of conflict of interest issues, ICANN policy restricts these gTLD registries from selling domain names directly through a retail channel. This is where the accredited registrar system comes into play. Similar to registry accreditation, when applying for registrar accreditation a company is saying they are a competent and responsible company ready to connect and buy directly at wholesale rates from the registries. When applying for registrar accreditation, a company also promises to abide by the rules, regulations and policies put in place by ICANN. Registrar accreditation is essentially the top of the food chain when it comes to the domain business. After ICANN does a thorough analysys of your application and company, you may become accredited. Once accredited, a company has the ability to purchase domains at registry level wholesale rates and in many cases, registries have specials and discounts which your company will be able to participate in.

Technically speaking, it’s entirely possible for anyone who’s really interested to become a registrar.

The process of becoming an ICANN-accredited registrar is complex and takes time, money and effort to meet ICANN standards. ICANN also checks long term possibility of the company staying in business. This is one way that ICANN prevents future registrars have enough financial backing so that they don’t become insolvent in the future.

Evaluation Process

When a registrar applies for accreditation, it goes through a series of checks :

Prove the financial stability of the company
Covers Risk involved
Provide adequate protection if anything goes wrong

Associated Costs

Non-refundable application fee of $3,500
$4,000 for an application that gets approved (recurring every year)
You will also need to show proof of at least $70,000 USD capital or be able to explain why you do not need this amount of working capital.
Variable quarterly variable fee (Operating Costs for ICANN)
This fee is divided among all accredited registrars, thus the amount that each registrar has to pay varies based on the number of registrars in a particular quarter
Transaction-based gTLD fee
Fee used for the expansion of top level domains available for registration. This is a flat quarterly fee, which is charged for each new domain name registration, renewal, or transfer.

It doesn’t end here, the rights and obligations of both ICANN and the accredited registrars are governed by individual Registrar Accreditation Agreements (RAA). Accredited registrars need to sign a few more agreements with ICANN which define various aspects of their conditions.

When to consider becoming a Registrar

Lots of reasons, if its just Maths, then the following is true —

Cx = I + Fx.

where

C = the commission you currently pay your registrar
x = the number of domains in a particular TLD.
F = the per domain name fees you pay ICANN / Registrar
I = the annual ICANN and miscellaneous fees

ASSUMPTIONS

Some assumptions about the fixed and variable fees:

1. Annual Fixed Fees of $10,000

The annual ICANN accreditation fees are about $8500/year.
$4000 fixed annual fee and variable fees of about $1125/quarter.
Data escrow fee $1000/year (RDE)
Business Insurance. ICANN requires that you have Commercial General Liability Insurance coverage of at least $500,000. This coverage must be maintained in force throughout the term of your accreditation. Let’s say $200/year.
Business Incorporation. Necessary to protect your personal assets from lawsuits. Let’s say $300 for initial setup and $300 per year for annual reports and franchise fees.

2. Variable Fees/domain: $0.50

$.20 per year per domain to ICANN
$0.30 per year per domain to Registrar

WORKING EXAMPLE:

For an example, let’s assume the following:

only have domain names at Verisign
average commission of $3 per domain
variable fees of $0.50 per domain
fixed annual fees of $10,000 to ICANN

Cx = I + Fx.
3x = 10000 + 0.5x
3x-0.5x = 10000
2.5x = 10000
x = 10000 / 2.5
x = 4000

4000 names required to break-even on cost of owning your own ICANN Registrar.

Not included in this analysis

The ICANN Application fee of $2500
Working capital. ICANN requires US$70,000 as a working capital requirement.
Also, registry fees must be pre-paid in order to registrar, renew and transfer domain names to your new registrar. Expect to deposit a month or two worth of renewals with each registry you own domains for. So, if you have 10,000 domains with a wholesale cost of $7/year, a month of pre-paid renewal fees is about $6000.
Salaries for yourself or others.
Cost for DNS Service
The cost of maintaining a business office (rent, furniture, equipment), website, email, payment gateway fees etc.
Accounting and Legal