Go Daddy, the current volume leader among registrars, recently returned to $8.95 after briefly lowering its prices to $7.95 in an apparent response to price cuts by EV1Servers and Hostway. Last month EV1Servers hiked its domain pricing from $5 per year to $6.49, which equals the lowest reseller rate available from its wholesale provider, OpenSRS.

But others are willing to sell domains below cost as a marketing strategy. The newest is MyValueHost, a new business unit of HostMysite.com, which has begun selling domain names for $4 a year.

"We started the offer a couple of weeks ago with very little promotion," said Lou Honick of MyValueHost, which was launched last year. "We register the domain names through OpenSRS and we're obviously taking a loss on every name registered, but the influx of hosting business has allowed us to sustain the offer." Honick said the offer, which has a 10-domain limit, has resulted in 500 domain registrations in its early days.

A number of providers using Go Daddy's Wild West Domains wholesale unit are also selling names below the $6.75 reseller rate, some as low as $4.95. The strategy hasn't yet affected pricing from domain wholesalers, who receive their minimum price even if their clients resell for less or even give them away for free, a strategy used by DotCanada and HostMySite are doing for customers who commit to a one-year hosting plan.