It's a common business practice called "loss leader". For these companies, domains are a by-product. Their main business is hosting or other services. Selling domains below cost is just another way to get new customers.austinandrew said:Anything under $6.25 including ICANN fees for .com means they're losing money...unless there's another purchase requirement. They're banking on you buying something else (or requiring it).
Think about it. Take iPower as an example:
If their cost is $6.25, and they sell it for $2.95, they lose $3.30. BUT they get a customer. Same $3.30 will HARDLY get them a click from AdSense (where top bids for "domain" and "hosting" keywords are over $5). And that's just a mere click, unlikely converting into a paying customer.
Make sense? Now, when you're a customer, it's just a matter of selling you some hosting. Plus, a year from now you will most likely renew these domains with them (some will drop, some will transfer out though) at a regular rate, so all "losses" will eventually be recovered.