Premium domains are domain names that have been registered previously and are now back on the market for resale. Premium domains are often short, memorable names that are made up of simple key words and search terms. You may also hear these names referred to as after market domains, pre-registered domains or secondary market domains.
Premium domain names have been increasing in popularity over the past few years because of the low availability of .com names. Since most of the intrinsic combinations of .com names are taken consumers have found that turning to the premium (or pre-registered) domain market gives them a chance to find a domain name that they could not have registered through traditional domain name searches.
The majority of premium domains have a .com TLD but there are also .net, .org and .biz names available to appeal to various businesses and organizations. Industries that are highly competitive (lawyers, consultants, real estate agents) or businesses looking to register their exact company or product name can really benefit from a premium domain because an intuitive, memorable name can help businesses differentiate themselves in a crowded market.
A premium domain will be more expensive than a new domain (premiums range from a few hundred to a few thousand dollars) depending on the name. The price is determined based on marketability, spelling, traffic, and economic trends. Highly notable domains have stronger branding potential, are easier to remember, and attract more traffic - so they may bring a higher price tag - but depending on the name and what you intend your site to do for your business, it may be worth the investment.