For me, it doesn't make sense to sell domains at higher prices. I'd rather customers save, and instead could buy more domains or advance register for multiple years, than trying to squeeze so much from a single domain, and scare people off...
Once customers realize that they are not getting the best bargain, they might run away for good, and you'll lose the residuals.
On the other hand, I still have customers that stay with me for well over five years, renewing their names without much hassle. And those who realize the good value will end up consolidating/transferring in more domains from elsewhere... And they might even offer lips service for free, referring more new customers...
Network Solutions (briefly acquired by the once $20B-monster Verisign, for USD6B, but later sold for cheap) and Register.com (once worth billions of dollars on stock market) used to be the biggest on the block, and look at what happened to them compared to the little newcomer that grew multiple times bigger by now -- you know which one I'm talking about
Our over dependence of US dollar is bad I suppose, causing price fluctuation on pricing, so domain vendors ended up having to set up a slightly higher fixed price in local currency, as not to confuse customers.
For hosting, of course, it's a different story. I agree that for domain, there aren't really much support needed except for the initial transaction, so, there lacks much encouragement to 'overcharge' customers...