When a website owner purchases a domain name from a registrar, he has the choice to purchase it in yearly increments. Customers pay for purchases immediately, and they can do whatever they want with the domain name for the duration of the ownership. When a domain name will soon expire, a registrar will contact the customer to ask him to renew the ownership. At this point, he can pay to continue owning the domain, which he will do if it’s integral to his business, or to let it expire. If he doesn’t pay for the domain name, it will expire and no longer point to his website.
Some registrars will park expired domains as they attempt to let the previous owner renew them. For instance, GoDaddy’s expired domains policy allows 42 days of domain name parking for most extensions before the company cancels the domain name. Once names become officially expired domains, the registrar can resell it.
In some cases, the expired domains simply become available on the market. However, some expired domains have the potential to be quite popular, which translates into profit for the domain registrar. In cases like these, the company can opt to put it up for auction to drive up the price of registration. Of course, not all domain names are distinctive enough, so they wind up back in the mix with other domains.
Consumers who have let their domain names expire risk the chance of others purchasing the expired domains. He will have to bid against others if the domain goes up for auction or hope to be the first buyer to purchase the domain name if it goes back into the regular pool. Losing a domain name due to expiration may hurt business or branding.
Because of these reasons, it’s important for consumers to check their emails or log in to their domain registration service to keep up to date with expired domains. Adding a payment option to the account to automatically renew domain names can prevent issues with expired domains. Most registration companies send multiple email notices about expiring domains, but consumers have to respond.