A premium domain like any other premium product is one that has a higher value than the rest of its kind. A domain or more properly, a domain name, is the human readable address of a website. There are a number of factors that can make a domain name more valuable.
Scarcity
We all know that a free market economy values goods based on supply and demand. A particular domain name can only be registered or owned by one person at a time. Since every domain name is unique the supply is always equal to one. That is why any domain name that is desirable to multiple people becomes valuable and therefore a premium domain.
Generic or Specific
Premium domain names are valued based on a number of factors. Interestingly, the more valuable premium domains tend to be either very generic were very specific. An example of a generic domain would be something like furniture.com. This domain would be highly valuable because it describes an entire product category, it’s easy to remember, and conveys the idea that the associated site is THE place for furniture.
On the other hand a very specific domain like EthanAllen.com is valuable because it is a brand name and very important to the brand owner. However, because of trademark law you need to be very careful about registering domains that are or contain product or company brand names.
Top Level Domains (TLD)
Top-level domains are the suffixes of websites. The three most common and well known top-level domains are .com, .net, and.org. There are a number of other top-level domains including .biz, .us, .info, and many more including country specific domains. The .com TLD is by far the most common among premium domains. This is because the .com version of a domain name is more readily recognized by the majority of people that are the others. There are certain circumstances under which a .net or .org domain would be preferable if these are fairly rare.
There still are many premium domain names that are not .com or even. net or .org. There is a high demand for domains that contain highly searched keywords. The search engines tend to rank sites for a particular keyword higher if that keyword is in the domain name. That means money in the pocket for those creating commercial sites with this type of premium domain.
Short and Pronounceable
Typically very short domain names are valuable especially if they are also pronounceable. If you own a pronounceable domain name of five characters or less it may be a premium domain. In most cases the shorter the domain name the more valuable it is
Age, Traffic, and Links
There are three more factors they can have a big impact on the value of a domain. It is thought that the longer a domain name has been registered the more respected and therefore more highly ranked it will be by the search engines. In the world of Internet marketing traffic means money so any domain name that receives regular traffic is more valuable. Links to a website can be the biggest factor in how well the site ranks in the search engines. Therefore, a domain name with many existing incoming links can be quite valuable.