When domainers talk about premium letters in domain names, they are typically referring to the letters found in short 2 to 4 letter .COMs. Domains with five letters or more normally do not qualify as a premium domain because once a domain exceeds 4 letters, the domain is no longer considered rare. There are exceptions though. Acronyms, dictionary words, and brandable domains can be valuable even if they exceed 4 letters because there is a greater demand for these.
Domain appraisals have many gray areas, so do not always think that a domain is worthless if it has one or 2 non-premium letters. Due to the rarity of available 4 letter .COMs, it is safe to say that all four letter .COMs have some sort of value. The more common the letters, the more in demand they are. The more in demand something is, the rarer it becomes. The rarer something is, the more valuable it becomes. This is simple economics. And this is what drives the value of 2 to 4 letter .COMs up and up. Today, I would guess that 100% of all 2 to 4 letter .COMs are registered. A few 4 letters may slip through the cracks and drop, but it won’t be long before someone picks it up.
Below are the three categories of domain letter quality as most domain experts would agree:
Here are what is considered premium letters: A, B, C, D, E, F, G, H, I, L, M, N, O, P, R, S, and T. As you can see, these letters are commonly used to create dictionary words and also popular acronyms.
These letters are considered average: J, K, U, V, W, and Y. Not as common as the ones above, but not bad either.
These letters are considered bad in most cases: Q, X, and Z. These are the least commonly used letters in the English language and as a result, do not produce the same demand that premiums do. But again, do not conclude that a domain is worthless simply because it has one of these letters. There are situations when having these letters are good, such as: Que.com, seX.com, and Zoo.com. As you can see, you can have some very valuable domains even with bad letters in them.
So basically, the more premium letters you have in your 2 to 4 letter domain, the higher the value it should have.
This the American standard for judging letters in short domains. The Chinese have their own standards for valuating shorts domain names.