VeriSign Inc, who run the domain suffixes .com and .net, have stated that the annual price of any Domain Name that uses either of the two will most likely rise this year. Although the increases at domain level will be minimal in terms of dollars, the aggregate gains for VeriSign will be most significiant.

Stratton Sclavos, VeriSign’s chief executive, had the following to say: "As it relates to .com, I think our expectation is that we'll have some action here in the first-half of the year," Sclavos told analysts on Wednesday, while VeriSign reported its fourth-quarter sales.

"We were able to raise prices in .net as of January 1 2007, so that clock is ticking as well. We're in the final process of determining our strategy there, but it is likely that it would happen simultaneously."

With the company signing a revised .com contract with industry regulator ICANN and the US Department of Commerce late last year, the company can now raise prices in .com by 7% a year, with a previous contract allowing it to raise .net prices by 10%.

However, it will be the registrars who decide to what extent the prices will rise for end users, due to VeriSign selling Domain Names through said registrars, with near certainty that even the cheaper, high-volume registrars who refused to budge despite the price increases last year, will now be forced to increase prices.

An increase of 7% on $6 means the wholesale price of a .com cannot rise to more than $6.42 per domain this annum. For .net, prices could go up 10% from $4.25 to $4.67 per domain per annum.

The increases will make little difference to most registrants, but organizations with large portfolios of domains that they intend to keep long-term should lock down their current prices with multi-year Domain Registrations, often available for up to 10 years.

The implications for VeriSign are good, who had 65 million .com and .net domains in its database at the end of 2006. So an extra 42 cents on each domain would mean up to $27.3m of found money, or up to $35.5m if the size of the combined namespaces continues to increase at 30% a year.

VeriSign will take a gross margin hit in the short term, who will also have to pay an extra $10m to ICANN this year due to a term in the .com contract. VeriSign also has to give six months public notice before increasing prices, giving them more time. They are allowed to raise prices by the same amount every year of its two contracts.

Sclavos told analysts "It's likely that any benefit from a potential price action would really start to flow through no earlier than Q4, Q1 of next year."