A premium domain name is a domain name, which is easy to remember, great for SEO, a name which is acquired by someone else, a sound investment and a domain which is priced higher, usually much higher than a regular domain.

Why will people pay more money for certain domains? The answer is simple, better brand value and more business.

There are certain qualities of the human brain which make the premium domain names what they are:

  1. We can remember a short domain name (other things being equal) much easily. For example, telepathy.com is much easier to remember than howtocommunicatewithotherpeoplewithyourmind.com. Both essentially mean the same thing. While the former is a premium domain name, the latter not.

  2. The human brain can remember a product related domain name much easily due to correlation factor. Thus a domain name cricketbats.com is much easier to remember by cricket playing people than buyallsportgoodshere.com. A cricket bat selling company will benefit much more by the former domain name than the latter, although both are capable of selling the products. For a cricket bat marketing company the former is a premium domain name.

  3. The human brain does not go very easily with the abbreviations. Thus a domain name softwareforshops.com is accepted easily by the human brain than sw4shops.com, although the latter is much shorter.

  4. The human brain does not go very easily with the abbreviations. Thus a domain name softwareforshops.com is accepted easily by the human brain than sw4shops.com, although the latter is much shorter.

  5. Most people look at .com domains or country specific domains. These command a good premium.

Why do people purchase premium domain names? To give their online presence identity. Domain name is first the impression of a site. A good domain name can provide credibility to your business. It is your first brand ambassador.

A domain name has a premium only if it can be sold at a premium. In other words, there has to be a demand for the domain name. If you can get cheap premium domain names, buy them immediately. Generally speaking the value of a premium domain is only what a buyer is willing to pay for it. Both the demand and price can vary with time. This is due to the change in business environment. Suppose you own a premium domain name for a wine manufacturer. If the business of selling wine is doing well. New distilleries will open and hence demand and the price of the domain name will increase. In general, what factors affect share prices also affect the price of a domain name. However to get a buyer for a premium domain may require more time and patience. While rules for shares and domain names are the same – buy low sell high, the turnover in the case of domain names is low.

The reward for the patience is high. You may fetch a price much higher than the original. But, there is a risk that if a domain is not in demand, it may become a dead investment. A premium domain is essentially, what can be sold. If you have bought a domain that cannot be sold it is not a premium domain name.It takes time for premium domains to sell. When you think the price will not increase significantly now, you should initiate the selling process.

source: Domain Brothers