Leasing vs. Buying IP Addresses

Updated 21 February 2023
7 min read
13 November 2020
Vincentas Grinius

As IPv4 prices are skyrocketing, and fewer resources are available, more and more companies face the question of whether they should buy IPv4 or lease IPv4 instead.

A person looking at a scale deciding whether to lease or buy IPv4.

When the Internet Assigned Numbers Authority (IANA) distributed the final block of Internet Protocol version 4 addresses (IPv4) in 2011, the price per a single IP address was approximately $5. Since then, we have been inching slowly towards IPv4 exhaustion. And IPv4 address shortage is now felt on a global level across all industries. Fortunately, organizations big and small have more options to deal with the situation than ever before. Many now choose to lease IP address space.

Why is Internet Protocol leasing so enticing? The pool of usable IPv4 addresses is shrinking, which drives the costs up. Given the increasing scarcity of the IPv4 address space and the fact that IPv6 is not yet ready to completely replace it, experts forecast that IPv4 costs will likely continue to skyrocket in the next few years. As a result, companies needing IP resources no longer find paying for IPv4 transfers and covering raw IP address prices a sustainable option. IP leasing, on the other hand, is the alternative everyone’s been talking about. 

Key takeaways:

  • IPv4 address space is limited; thus, IPv4 addresses are a scarce commodity held mainly in the hands of hyperscalers and internet service providers (ISPs).
  • The prices of IPv4 address blocks are increasing yearly; therefore, those planning business expansion turn to IP lease as the more cost-efficient solution compared to buying.
  • IP lease services can be affordable, offer short-term and long-term solutions and provide professional IP reputation monitoring and abuse management services.

IPv4 address scarcity: What happened and where are we now?

There are 4.29 billion IP addresses within the IPv4 address pool. Unfortunately, the internet architects didn’t think about the limited capacity of this IP address space when IPv4 was first introduced in 1981. At the time, it seemed that nearly 4.3 billion IPv4 addresses would be a sufficiently large pool for a long time. Unfortunately, today, acquiring a new IP address is no longer a viable option.

That said, large IP address blocks are still in the hands of big corporations, such as Hewlett-Packard, Xerox and others. Nowadays, these IP holders often sell their IP addresses because they originally received far more resources than they could have ever needed. It all comes down to the classful network allocation in the early days of the internet, which led to the inefficient allocation of IP blocks.

So, how many addresses do these corporations still hold on to? It is widely believed that there are around 820 million unused IPv4 addresses owned by large corporations that, for the most part, aren’t doing anything with them. Yet many new and expanding enterprises that need IP addresses are struggling to acquire them.

Globe as a pie chart representing 20% of unused IPv4 pool.
20% of the global IPv4 pool remain unused, in the hands of big IP holders

IPv4 transfer price analysis

Even with the shortage of IPv4, the transition to IPv6 is moving at a snail’s pace. This situation has created a widening gap between the supply and demand of IPv4 addresses, making IPv4 an expensive commodity.

The shortage of available IP addresses gave rise to the IP brokerage market. In 2011, the first widely publicized re-allocation occurred when Sandra Brown brokered the sale of Nortel IP addresses to Microsoft. In this market, IP brokerages use their network and contacts to match buyers to holders.

As the graph below shows, IPv4 addresses have been transferred quite actively throughout the entire decade, with the momentum picking up in 2015.

IPv4 transfers between 2012-2022 in millions graph.
IPv4 transfers in million, between 2012 and 2022

Who rules the IPv4 transfer market?

Between 2014-2022, IP prices were between $6 to $60, depending on the subnet size. According to our analysis, throughout 2021, the average IPv4 price more than doubled. IP addresses were available for $23 to $60 per IP for virtually all IP block sizes.

Historically, the most significant IP address buyers were internet service providers and hyperscalers. For example, Amazon AWS alone accounts for 52.3% of all hyperscalers IP transfers.

The ISPs and hyperscalers in the 100K+ segment hold 85.8% of the entire IPv4 transfer market share. 

At the same time, the majority of industries that purchased 10K to 100K IPv4 segments were data centers and ISPs, which accounted for 9.8% of the IP address transfer market.

In the 1K to 10K IPv4 segment, most buyers were data center operators, hosting service companies and various small and medium size organizations, which share 3.9% of the market.

The same can be said about the 1K segment, in which the majority of IPv4 buyers were data center operators, hosting services providers and various small and medium size organizations. This segment accounts for 0.5% of the market share.

A pie chart representing IPv4 transfers by company size.
IPv4 transfers, segmented by company size

Our analysis suggests that the most significant stakeholders in the IPv4 transfer market are large corporations highly dependent on IP address space to sustain the growth of their businesses. The purchasing power of these corporations backs small and medium-sized companies into a corner. Because they generally don’t have enough financial resources to purchase and secure large quantities of IPv4 addresses.

The advantages of IP address lease 

The IPv4 shortage across the world helped create not only the IP transfer market but also the IPv4 lease market. This market has become the go-to place for small and medium entities to acquire IP addresses at a reasonable price. But that is not the only benefit of IPv4 leasing.

Due to the current scarcity of IPv4, Regional Internet Registries (RIRs) – AFRINIC, APNIC, ARIN, LACNIC and RIPE NCC – require clients to justify their IPv4 requirements. And it’s a costly endeavor as well. Ultimately, transferring IPv4 ownership between RIRs is a time-consuming and complicated process. On the contrary, IP address leasing doesn’t require changing ownership.

Leasing also supports a faster acquisition of IP addresses. Top lease providers can offer rich IPv4 availability for all five RIRs. That means IP lessees are not restricted about how many IPs they acquire and use. Furthermore, acquisition via lease can be coordinated within minutes. Whereas it can take weeks to find and deploy IPs acquired via a purchase.

Additionally, IP lessees can choose the desired lease period. IPXO Marketplace clients can select a long-term commitment (up to five years or more, depending on the agreement) or start with a minimum IP lease term (a month). This is what makes leasing a highly customizable solution

Undeniably, leasing is also the more cost-efficient solution for companies looking to expand business operations and grow their global presence. On the contrary, buying IPv4 addresses is an expensive proposition. Especially for companies that are constantly looking to expand their IP address pools. For example, a hosting provider or an ISP that needs to support its growing client network. 

Let’s not forget that leasing offers an opportunity to have IPs deployed quickly. You can access resources within 5 minutes and bring all the IPs to any infrastructure within 24 hours. If you were to rely on an RIR to assign the IP space for you, you would have to join a waiting list and, potentially, wait months or years. Moreover, RIRs cannot offer rich subnet availability. In fact, most cut members off at a single /24 allocation.

IPv4 lease in numbers

24, /23, /22 and /19 IP blocks have been the most popular among lessees on the IPXO Marketplace. Since the launch of the platform in 2021. Here is the average cost per IP from different RIRs in 2022:

  • $0.51 (AFRINIC)
  • $0.51 (RIPE NCC)
  • $0.55 (ARIN)
  • $0.66 (APNIC)
  • $0.69 (LACNIC)

Without a doubt, the IPv4 transfer price has a direct impact on the IPv4 lease pricing. The fewer IPs remain in the overall address space, the higher the overall price. On the other hand, the lease price also depends on the commitment the lessee is willing to take. Generally, the more IP addresses are leased, the lower the price.

An extended lease contract can reflect favorably on the overall lease price. If a lessee commits to leasing IP addresses for an extended period, they can negotiate a lower price. In 2022, IPXO introduced the Commitments feature that enables IP holders and IP lessees to negotiate custom lease terms, set the desired lease term and subnet prices. 

How leasing IP addresses minimizes the financial and resource burden

When businesses lease IPv4 addresses, they can conserve their budgets and time needed for the cumbersome process of deploying their own IP network infrastructure.

Leasing also offers great benefits for those who need IP addresses for a limited timeframe. Therefore, IPv4 leasing is a more appealing solution for those who need IP resources at a reasonable price for just a few months, for example.

Another motivation to lease IPv4 addresses is the decreased risk of IP blocklisting due to abuse or spam. When you lease IPv4, you do not need to constantly monitor the IP space because that is taken care of by the lease provider. 

The IPXO Abuse Prevention team automatically resolves more than 95% of IP abuse cases. The remaining 5% are handled manually, but the high level of automation ensures that manual resolution is quick and effective. This ensures that enterprises do not need to spend additional money on hiring in-house specialists for IP space abuse management and mitigation, as well as IP reputation monitoring.

Lease IP address space to save time and money

The ugly truth is that there are not enough available free IPs to go around in 2023. Unfortunately, the scarcity-driven IPv4 market poses a challenge for enterprises trying to acquire IPv4 resources to scale their operations. 

The good news is that the IP lease market is now in a position to provide organizations in need of IPv4 resources with a reliable, viable and sustainable solution.

In 2021, IPXO introduced the world’s first fully automated IP resource marketplace. It provides access to a diverse selection of subnets and an array of amazing benefits that can help to cut costs further. 

The IPXO Marketplace offers an easily accessible and cost-effective solution. It allows companies to lease IPv4 addresses at reasonable prices and expand their businesses without sacrificing entire or big portions of their budgets.

Have a look at how much you can save by leasing instead of buying IP addresses. Have doubts? Book a demo, and we will further demonstrate how you can acquire the IP resources you need in the most cost-efficient way.

Your #1 IP lease platform

Fully automated. Fully accessible. Fully supported.

FAQ about IP address acquisition

How to buy IPv4 addresses

You can use brokers’ services to purchase IPv4 addresses. However, note that there aren’t free IPs left, and the reclaimed or unused IP space is highly limited. RIRs’ members have to wait around a year or more to get small IP blocks, and big companies with significant purchasing power are always capable of covering high IPv4 prices that a smaller business might not be able to. Unfortunately, the scarcity and high demand for internet resources have significantly inflated the raw IP price. This is exactly why, today, many choose to lease IPv4 instead.

What’s the average IPv4 lease price?
Can I bulk-buy IPv4 addresses?
What are the top benefits of leasing IPs?
Which companies lease IP addresses?

About the author

Vincentas Grinius


Vincentas is a business-driven geek with over 15+ years of network, infrastructure and internet policy experience. As a CEO at IPXO, the Internet Protocol platform, Vincentas focuses on helping address complex network management issues and the global IPv4 shortage.
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