You have come up with a great new idea for a website and you only need a good domain name? A quick check on a WHOIS lookup website shows that the domain is available, but you see a price of $500 or even $5000 when you try to register it? You can get a new .com domain for as low as $8.38, so how come the one you want is so expensive? You have most probably come across a premium domain name. Below, we answer some of the most common questions regarding these domains.

What is a premium domain?

There are two types of premium domain names. The first one refers to any memorable domain name with high marketing value that is already owned by an individual or a company. Voice.com, for example, was registered in 2001 and was sold for $30 million in 2019. The name is short, easy to remember and has a high value, thus it is considered to be a premium name. This type of domains is sometimes called aftermarket premium domains.

DomainPrice
Voice.com$30 million
360.com$17 million
Sex.com$13 million
Fund.com$12 million
Hotels.com$11 million
Tesla.com$11 million
Porn.com$9.5 million
Porno.com$8.8 million
Fb.com$8.5 million
We.com$8 million
Top ten most expensive domain names. Source: Wikipedia

The second type of premium domains is priced higher directly by the registry organizations that manage the top-level extensions. These domains have not yet been registered by any individual or company. This is the reason why such domains appear as available for registration if you look them up, but their price is much higher than a standard name with the same extension. This type of domains is often called registry premium domains.

In either case, you can easily see if a domain name is a premium one by looking at its price. If the name costs significantly more than a random available name with the same extension, then you have come across a premium domain. If you notice that the price is just a bit higher, most likely somebody registered the domain with the hope to sell it for profit. Most of the registered domains that are for sale are not premium ones.

What makes a domain name premium?

There are no clear rules which domain will be a premium one. This is decided solely by the registry, at their own discretion. Whether an existing domain will be premium depends on its owner and the price that potential buyers are willing to pay. Yet, there are a few characteristics that differentiate a premium domain name from the pool of all names. They can give you an idea whether the price you have to pay is justified.

Top 10 trending keywords in .com and .net registrations in Aug 2019. Source: Verisign Blog
  • Length. The shorter the name, the better. All 2- and 3-letter domains are usually considered premium ones as they are used for abbreviations by various companies, but longer domains can have high value as well. Most good domains rarely consist of more than a couple of words, though.
  • Direct traffic. A good domain name can bring additional organic traffic to a website. Carpenter.store is an example of a premium domain name with a new generic TLD that is priced much higher than a standard .store domain. As the short domains with the original TLDs have been taken a long time ago, the new TLDs allow site owners to get a short, one-word domain for direct traffic. Usually .com domains are priced higher, though, as a lot of people will often add “.com“ after the term they are looking for.
  • Brandability”. This does not necessarily refer to the length. If the domain can be used as a brand name, this can increase its price, even if it is longer.
  • SEO. The right domain will often match the exact phrase people search for on search engines. Alternatively, it can include one or more keywords. Usually exact search phrases are priced higher.
  • Buyer interest. A domain name may not look very appealing at first glance, but if it is being auctioned and bids get high, it can easily become a premium domain. This is usually the case if a newly founded company wants to acquire an already existing domain that matches its name or the name of one of its products or services.
Popular marketplaces where you can buy or sell aftermarket premium domains:
https://sedo.com/
https://namebio.com/
https://www.hugedomains.com/
http://www.namejet.com/
https://www.afternic.com/
https://www.flippa.com/

Do all TLDs have premium domains?

The short answer is – no. A lot of the new generic TLDs like .auto, .club or .site, as well as some country-code TLDs like .ch, .tv or .fm have registry premium domains, but the original gTLDs like .com, .net, .org, and most country-code TLDs like .io or .ai do not. You can register a memorable domain name with the latter group of TLDs at the regular price, as long as it has not been registered by somebody else.

Aftermarket premium domains do not depend on the TLD. Usually two- and three-letter domains are considered to be premium regardless of their extension. Any existing name with any TLD and a random length can also become a premium one as long as its owner is willing to sell it and there is a buyer willing to pay its price. There are examples of seemingly worthless existing names with country-code TLDs that are bought for a lot of money by the owners of the .com name.

How much does a premium domain cost?

There is no definitive answer to this question. The price to register a premium domain is set directly by the registry based on the estimated value of the domain. Why they put a particular price on a given name is not public information. Existing domains that are considered to be premium are priced solely by their owners. Regardless of the type of domain you want to buy, registry or aftermarket, the initial price will often be quite high – either to register, or to acquire and transfer the domain. The renewal price is usually the standard one for the particular extension, but this is not always the case. Registries sometimes set a renewal price that can be equal or close to the registration price. If you decide to buy a premium domain, you should check how much you will have to pay the following year as well, not just for the initial purchase.

So, do you really need a premium domain?

Premium domains are significantly more expensive, so before you buy one, you should weigh the pros and cons, and see if it is worth getting such a domain. In some cases, a premium domain is definitely worth the money, while in others it may be an unjustified expense and a loss of money.

+ You can get the best possible domain. Whether it was the first one that came to mind, or you chose it after a careful consideration, it is clearly your first choice for a domain name. If this is the case and there are no other factors to affect your decision, you can probably go ahead and buy the domain.

+ You can invest in a premium domain. If the estimated value of a particular name is high, it is very likely that some company will want it sooner or later. Many domain investors buy such domains and sell them for profit. This refers to domains that are already considered premium ones, not to random available domains that some people register at the standard price and resell for $70-$80.

+ You can monetize it. If your project will earn you some money, it is justified to spend more on a better domain name. The additional traffic the domain can bring you will likely pay off the higher amount you had to pay for it.

It is too expensive. This is usually the case for existing domain names, but registry premium domains can be quite pricey as well. If you need a new name for a personal website or for a small project, there is no point spending more money for it than for the entire project. If most of your budget will go for the domain, you will be better off considering other options.

You may have better alternatives. JohnDoe.com may seem to be a great domain name, but JohnDoe-law.com will be far more suitable if you have a law firm, for example. Do not fall for a domain name only because a third party considers it to be more expensive than a less expensive, but more appropriate name.

Copyright. If you spend a lot of money on a domain name, you should do your research in advance. You should make sure that you are not buying a domain that includes a trademark as you can easily lose it. An automatic system or a seller can price a domain quite high based on some name or keyword it includes, but if a company holds the trademark, they can file a lawsuit and get the name. You will end up with no domain and no money, so doing some research is one of the most important things you should do before you buy a premium domain. This is valid for registry premium domains as well.

Brian Norgard, ex-CPO @ Tinder, tech investor and entrepreneur

ICDSoft’s opinion on registry premium domains

We at ICDSoft believe that domains should be a commodity service, as reflected in our fair pricing for domains policy. Premium domains are against our fair pricing policy – they are a way to extract more money from domain owners, without putting any additional work, or creating any additional value. That’s why we do not sell premium domains on our site, and in general, we do not recommend their use.

In conclusion

Buying a premium domain name can be a big investment, so you should choose carefully whether you want to buy one or not. You should see whether the advantages of buying the domain outweigh the disadvantages. Sometimes buying such a domain can pay you back, but often it is just a waste of money.

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