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Er, it depends really.
Hosting a guy on a $15/mo hosting plan, and him wanting 100 different domains to different directory trees is far from profitable. It eats up file descriptors, and is just more shit to maintain should you have to move the sites to a different server or whatnot. It also eats up some CPU cycles for log rotation and stats generation, which if you multiply 50 domains over 100 customers, can actually add up to quite a lot.
However, paying $5/mo per domain when you're actually putting revenue into your host is rather stupid as well.
So, what we do to attempt to keep things fair to all parties, is just require an "average" of $2/domain to be spent. i.e. if one domain uses $200 in traffic, you can have 100 domains total with no extra charges. We're fairly loose on the policy, but it's there as we've found people love to abuse "unlimited" domains.
Of course, dedicated you can do whatever the hell you want. And if you have an idea on how to be billed where we don't take a loss on you we're all ears as well.
But, just trying to offer a counter point to the misperception who say it's "free" to the hosts. It's definitely not completely free, but it also doesn't cost much to keep them around.
So yes, I would say $5/mo is a bit much for an extra domain. ;)
-Phil
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