Since domain names are finite, like real estate, why not charge based on demand? In this scenario, in-demand domain names (mostly based on length) would have higher renewal fees than undesirable ones. Perhaps add an order of magnitude in pricing for each character under 7?

  >=7 - $10
  6 - $100
  5 - $1000
  4 - $10,000
  <=3 - $100,000