In your case, I'd say that your hosting company set the price.
The hosting company would have registered the domain for $6.95 and pocketed the rest.
The money is used for the betterment of their entertainment :)
Is the domain in your name? If not, they might double the price this time next year.
You should always register your own domain name(s).
You should always have full control over your own domain.
The domain name should be in your name.
You don't need to purchase a domain name from the same company you purchase your hosting from.
MrLeN
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