How Is the Price of an IP Address Determined?

The market for IPv4 addresses has become increasingly dynamic as the global demand for internet connectivity continues to grow. For organizations looking to buy, sell, or lease IP addresses, understanding how prices are determined is crucial. Several factors influence the price of an IP address, including supply and demand, block size, block reputation, market trends, and regional considerations. This blog will provide insight into the key elements that shape the cost of IPv4 addresses.

1. Supply and Demand Dynamics

The most significant factor affecting IPv4 address prices is the basic economic principle of supply and demand. IPv4 address space is finite, with only about 4.3 billion addresses initially available. As these addresses have been allocated over time, their availability has diminished drastically, creating a highly competitive secondary market.

• High Demand: The growing need for IPv4 addresses, driven by IoT, cloud computing, and expanding internet infrastructure, has resulted in strong demand, especially from industries with legacy systems that are not fully compatible with IPv6, or with customer bases that still require IPv4 connectivity to function.
• Limited Supply: With IPv4 exhaustion in all the RIRs like ARIN, RIPE, and APNIC, the scarcity of addresses has driven prices upward. Organizations unable to transition to IPv6 entirely still rely heavily on acquiring IPv4 space, further straining the limited supply, and due to the inherent incompatibility of IPv4 and IPv6, there are few organizations that can rely on IPv6 exclusively.

2. Market Trends and Timing

The next step is assessing your organization’s IPv4 needs. Consider factors such as connected devices, expected growth, and future plans. Identifying these needs helps determine the appropriate block size for your network.

The price of an IPv4 address is also shaped by broader market trends and timing considerations. For example:

• Economic Conditions: Periods of high economic activity and technological expansion tend to push prices higher as more organizations enter the market for IP resources. Special circumstances such as the shift to remote work during the Covid pandemic also can have a significant impact on demand.
• Policy Changes: Adjustments to RIR policies, such as the introduction of inter-RIR transfers, can influence prices by increasing or limiting market accessibility.
• Seasonal Fluctuations: The market may experience seasonal trends, with heightened activity during certain times of the year when businesses are budgeting for new projects or expanding operations. Large buyers of IP addresses tend to be more active early in the calendar year when their budgets are first established.

Organizations seeking IPv4 addresses should monitor these trends and work with experienced brokers, like IPTrading, to make well-timed acquisitions.

3. Pre-Approval and Documentation

The size of the IP address block being bought or sold plays a crucial role in determining its price:

• Smaller Blocks: Smaller blocks, such as /24 (256 IP addresses), tend to be more expensive on a per-address basis. These are often favored by smaller organizations or businesses that need to fill specific gaps in their network infrastructure.
• Larger Blocks: Larger blocks, such as /16 (65,536 IP addresses), are more cost-effective on a per-address basis due to economies of scale. However, they require a larger upfront investment and are typically purchased by larger enterprises or service providers. Until recently, larger blocks actually commanded a market premium per address due to the demand of just a few large cloud providers. Recently, however, prices have evened out and the disparity of price per address between larger and smaller blocks has faded.
• Fragmentation Considerations: Aggregated blocks (unfragmented address space) are often more valuable because they simplify routing and management, making them particularly attractive to buyers.

4. Block Reputation

IPv4 blocks that are “clean” of blacklists and other impairments are always preferable to blocks that have been misused for spam or other nefarious purposes.

5. Regional Considerations

The geographic location of an IP address also impacts its price. Regional Internet Registries (RIRs) have different policies, fees, and availability of IPv4 space, which creates regional pricing differences:

• ARIN (North America): With a well-developed secondary market, ARIN-region addresses often command higher prices due to strong demand and limited availability.
• RIPE NCC (Europe): RIPE does not require justification for IP transfers, making it easier for buyers to acquire addresses. This accessibility can influence pricing trends within the region.
• APNIC (Asia-Pacific): In regions like Asia, where IPv4 demand is exceptionally high due to rapid technological growth, IP prices can be particularly competitive.
• Inter-RIR Transfers: Since IPv4 addresses can be transferred between regions, such as from APNIC to ARIN, this limits the amount of price disparity between regions. However, the desire for buyers to purchase addresses sourced in their home region to avoid geolocation issues can give a slight demand boost from one IP block to another.

Navigate the IPv4 Market with Confidence

The price of an IPv4 address is influenced by a complex combination of supply and demand, market trends, block size, and regional factors. For organizations not ready to make a large upfront investment, leasing IPv4 addresses has become a popular alternative. Leasing offers short-term access to IP space without the need for permanent ownership, providing a flexible solution for businesses with immediate but temporary needs.

For businesses navigating this competitive landscape, partnering with an experienced broker is essential to secure the best value. At IPTrading, we specialize in helping organizations buy, sell, and lease IPv4 addresses while navigating market fluctuations and RIR policies. With years of experience and a global network, we ensure your IP transactions are seamless, compliant, and cost-effective.

Visit IPTrading.com to explore your options and get expert guidance on your IPv4 needs.