Why Is a Premium .Com Domain So Expensive? (Is It Worth It?)

To publish a website on the internet, you need a domain and web hosting service. Although standard domains are pretty cheap, premium ones can cost up to millions of dollars.

So, why are they so expensive?

Premium domains are primarily expensive because of their generic value. A premium domain name can generate high-value organic traffic for your website without spending extra money on marketing. Other factors such as buyer interest, the domain’s history, and brandability also contribute to the high prices.

This article looks at premium domains and why they are so expensive. Keep reading to find out if they’re worth the high price tags.

What Is a Premium Domain?

When you’re starting a website, you need a memorable domain name that your visitors can use to search it on a search engine.

Without a domain name, users would have to memorize your address, which is a long string of words and characters.

However, not all domains are created equal. Memorable domains are perceived as more valuable than others, hence the name “premium domains.”

Most premium domains are put up for sale by former owners. They are commonly referred to as aftermarket premium domains. These might have been previously active, but the individuals or companies are now spinning them for a profit.

Sometimes the domain name might also be ranked as premium by the registry organizations that manage high-level extensions.

Although they’ve not been previously registered by a company or individual, they will be more expensive than a standard domain name with the same extension. These are called registry premium domains.

Why Are Some Domains Premium?

Most premium domains acquire the title due to how memorable they are. However, three key factors turn an aftermarket domain into a premium one:

Keywords: Some domains have high-value words that people tend to use in searches.

Marketability: A memorable name, probably used in a previously popular website.

Length: Domains with one or two words are more valuable.

Domain extensions: Domains with top-level extensions like .com and .org are typically more valuable.

When it comes to registry premium domains, there are no set criteria to determine which domain will be premium. The registry only decides this at its own discretion.

How Much Is a Premium Domain Worth?

Premium domains can get insanely expensive. They are also costly to renew, although their values hold up quite well.

Premium Domain Prices

A standard domain name can cost less than $15. In fact, some hosting services give you a domain for free when you subscribe to web hosting.

On the other hand, Premium domains can cost anywhere from a few hundred to tens of millions of dollars.

For instance, a registry .com premium domain costs around $650 in 2022. While some aftermarket .com premium domains can cost upwards of $5 million. It mostly boils down to the domain name itself and your registry organization.

Premium Domain Renewal Price

Premium domain renewal prices can also be pretty high. However, they also vary depending on where you got the domain.

For instance, a registry premium .com domain costs around $28 to renew annually. However, these fees increase every couple of years, but you can avoid the price hike by paying a couple of years in advance.

On the other hand, premium.TV domains cost more than $1000 to renew annually.

Why Are Premium Domain Names So Expensive?

Considering that you can get a domain for less than $15, what justifies some premium domains’ million-dollar price tags?

Here are a few reasons:

1. The Domain’s History

A used domain registered a decade or more ago is likely to have a strong history. This refers to healthy traffic stats and valuable link juice.

Thanks to this positive history, the domain will likely rank higher on a search engine. As a result, your new website will not necessarily start from scratch.

Furthermore, if a domain has previously been used for a popular website, former visitors are likely to search for it again. This is especially useful if it was used for the same purpose you’re planning to use it for.

For instance, Holiday.com is listed for sale on aftermarket sites. If a hotel or travel agency buys this domain, they’ll start receiving visitors as soon as the website is live.

2. Generic Value

Some of the most valuable aftermarket domain sales involved domains with generic names. For instance, CarInsurance.com sold for almost $50 million.

This sort of generic name is valuable because it has an industry-wide appeal. Anyone looking for a car insurance company but doesn’t have one in mind will type “Car insurance” on the search engine. And with the right SEO, CarInsurance.com will rank first on the search.

Most one or two-word domains have generic value because they represent words and phrases people are likely to search. This can be seen from the most valuable domain sales as they’re primarily from one and two-word names.

3. Direct Traffic

A good premium domain name will bring organic traffic to your website. Like in the example above, the car insurance company will not need a complex sales funnel to find visitors.

This will save the company on advertisement and affiliate marketing costs.

As a result, a good premium domain is a long-term investment that will slowly but surely return its value.

4. Buyer Interest

At first glance, a domain name might not look very appealing. However, a particular user might have an important use for it.

Take fb.com, for instance. It belonged to the American Farm Bureau Federation but was bought for $8.5 million by Facebook.

Without Facebook’s interest in the name, it wouldn’t have been worth nearly as much.

5. Brandability

If the domain name can be used as a company’s brand, it increases in value. For instance, Copywriter.com has been listed for sale on aftermarket websites.

If a company wants to offer copywriting services, it can buy the domain and use it as its brand’s name.

This saves them the effort of coming up with a creative and memorable name for their business while also generating organic traffic.

What Is the Most Expensive Domain Name?

The most expensive recorded domain name is CarInsurance.com which sold for $49.7 million. Insurance.com sold for $35.6 million, while Insure.com cost the buyers $16 million. In fact, most of the highest domain sales involve insurance companies.

However, other high-value domains have been sold behind closed doors, so it’s difficult to tell how much they cost.

Is It Worth Buying a Premium Domain?

Premium domains are quite expensive. It’s therefore essential to weigh your options before purchasing one.

In some cases, it’s a necessary purchase, while it’s a waste of valuable resources in others. Here are the things to consider.

Does It Add Value to Your Business?

If the premium domain has good generic value and brandability, it might be worth considering. It will increase your traffic and help your brand grow.

On the other hand, if your business already has a strong brand, you can settle for a standard domain and work on spreading the website’s awareness through your other avenues.

Do You Have Better Alternatives?

Sometimes you might have a standard alternative that is just as good as the premium domain. For instance, JoeSmith.com is just as good as JoeSmith-law.com if you operate a law firm. The latter will be much cheaper to register and renew because it’s not premium.

Is It a Worthwhile Investment?

Some investors buy premium domains to hold and sell later for a profit. You can research trending phrases and create a domain that other companies might want in the future.

How Do You Sell a High-Value Domain Name?

Not too long ago, you had to wait for interested parties to approach you when you had a valuable domain name. Fortunately, there are tens of domain brokers nowadays.

They offer excellent services such as price evaluation and negotiating on your behalf. Most domain brokers charge a flat fee of 10% to 20% upon the deal’s completion.

Where to Buy Premium Domains

There are several places you can buy premium domains online. If you’re looking for a registry premium domain, you can easily find one from a registry management organization.

However, for a previously registered premium domain, you can browse through marketplaces such as: