Sometimes, what seems to be an obvious solution to a problem is not the solution. For a long time, users complained that the reason why they were not renewing their .KE domains (Kenya Top Level Domain) were the high cost of renewals. It was assumed that if the renewal prices would be lowered, most people would renew their domains.
The cost of renewing a .KE domain was usually higher than that of renewing another domain extension such as .com and the rate of deletion was high.
For context, domain deletion is a common problem for many registries and in the Kenyan context, more than 50% of all domains registered with the .ke registry, KeNIC, are never renewed.
In November 2020, KeNIC registered 3,599 domains and deleted 3545 domains, leading to net growth of only 54 domains. Dealing with the deletions would be a good way to ensure the sustained growth of the registry. This is why KeNIC was looking for ways to increase the renewal rate and reduce deletions.
This was put to test in the first quarter of 2020. KeNIC lowered the renewal price for the .co.ke domain to match the registration price. This was a reduction from KES 1160 to KES 650. The offer would run for three months to see if this would get more people to renew their domain names.
The promotion ran for three months after which it was dropped. During the promotion, several people rushed to renew their domains, including the ones that had not expired yet. However, there was just a slight increase in the number of renewals that were happening and most of it was because people were renewing their domains in advance.
The argument that people were not renewing their domains due to the high cost involved was debunked.
During the promotion, KeNIC ended up losing money because it was established that those who were quick to renew their domains were the people who would still have renewed the domain names even at a higher price. By lowering the price, KeNIC would end up with fewer monies for the same volumes of domain renewed. Lowering the price would thus not be justified because KeNIC is a monopoly when it comes to .co.ke domains, and if the same number of people are to renew their domains irrespective of the price, setting the price as high as possible ensures maximum profits for the firm.
While KeNIC had nothing much to gain by lowering the renewal cost for the domains, there is a different set of people who have. These are domain registrars. Domain registrars are companies that act as the intermediaries between the registry – KeNIC, and the registrants (the end-users buying the domains).
Many registrars are offering the .ke domain names and the top-selling registrars are known to have low prices for their domains. Since they compete against each other, the one with the lowest prices in the price-sensitive market wins. It is usually a zero-sum game, and a gain for one registrar is a loss for another one.
Consequently, registrars end up registering the domains at a loss, in the hope that they will recoup the money when their clients buy other related services such as web hosting, web design services, or even SSL certificates. KeNIC sells domains to the registrars at KES 650, then some of the registrars sell to the registrants at only KES 300, effectively subsidizing the cost of the domain name. Here, low prices translate to higher volumes.
The lesson from this is that to increase the volume of domains sold or renewed, KeNIC may need to focus on something else away from the price. It could be helping users find value from their domain names, but one cannot be very sure until good research is done. This is a problem many entrepreneurs face and sometimes, the only way to be sure of pricing is to test things out.
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