Becoming a domain name registrar involves a complex and regulated process that can be expensive. Here are some factors that contribute to the high cost of becoming a registrar:
ICANN fees: ICANN (Internet Corporation for Assigned Names and Numbers) is the organization responsible for managing the domain name system. ICANN charges fees to new registrars as part of the accreditation process, which can be quite substantial. Technical infrastructure: To become a registrar, you must have a robust technical infrastructure, including servers, databases, and software. Setting up and maintaining this infrastructure requires a significant investment. Compliance requirements: As a registrar, you must comply with various legal and regulatory requirements, including data protection, consumer protection, and anti-money laundering regulations. Meeting these requirements can take time and effort. Marketing and customer acquisition: Once you become a registrar, you must attract and retain customers to make the business viable. This requires marketing and advertising, which can also be costly.
The first part of the decision to become an ICANN registrar is understanding the market in which you intend to operate.
Becoming an ICANN registrar generally happens when a hoster has a large number of domain names under management (DUMs) and it makes financial sense to become an accredited registrar rather than just a reseller.
Most country level markets are composite markets in that they have a ccTLD component and a gTLD component. Where the ccTLD is strong, the market for gTLD domain names is limited because there will be competition from existing accredited registrars and resellers of the local ccTLDs and gTLDs.
Much of the .COM market share in most markets is historical. That means that they are domain names that have been registered more than two years ago. Registrars tend to make more money from renewals than they do from new registrations. The current first year renewal rate for .COM is about 54% (it varies by month). That means that of domain names registered last year, approximately 46% will not be renewed. The blended renewal rate (the number of domain names that are renewed in a month divided by the renewals + deletions) is approximately 72% but that varies by registrar.
A new registrar with no experience in the market will need a very large marketing budget in addition to marketing staff. It would be also be in a highly contested market against far better funded and well established registrars. Getting investment for such an operation without the necessary staff and pre-exsting hosting business will be difficult.
There are companies that provide "registrar in a box" services that will set up a registrar operation but it is still expensive and there is no guarantee of a return on investment. It might be better to gain some experience as a reseller first. It might be cheaper to become a ccTLD registrar though the competition will probably be more intense if the ccTLD is beginning to grow in your local market.
There are approximately 2,551 ICANN accredited registrars but of these only 800 or so are considered retail registrars. The rest are drop catch registrars that don't sell to the public and only exist to catch freshly deleted domain names. Many registrars use domain names to upsell the customer to products with a better profit (hosting etc) so establishing a registrar involves much more than just registering domain names for customers.