Diamond Prices
Diamond price is based, first of all, on its quality. Cut and finished diamonds are graded for cut, color, clarity, and carat (weight). And, the better the various grades of the diamond are, the higher the price will be. The price difference between adjacent lower grades of cut, color, or clarity, or between adjacent carat sizes, will be small. The price differences between higher grades, or larger carat size cutoffs, will be much more significant.
How do prices get set in the first place and what can you do to get the best diamond at the best price?
Here is a little perspective on how diamond prices are arrived at.
About $13 billion US worth of rough diamonds are produced every year. The total value of all diamond jewelry sold is closer to $72 billion US. And, there is a chain of events and supply that ends up with your diamond ring.
Exploration
Mining
Sorting
Cutting and Polishing
Jewelry Manufacturing
Retailing
Exploration and mining are what find and produce diamonds. Sorting, cutting, and polishing create the individual diamonds that end up in engagement rings and other jewelry.
Rough diamonds are sold at auction by producers and the buyers are those who cut, polish, and manufacture finished diamonds. These auctions, called sights, involve a handful of large diamond mining companies and the 79 sight holder manufacturing companies. This is where the first price level of a diamond is set, the price of the rough gem.
Manufacturing diamonds is expensive. The technology employed in this day and age to cut and polish gem-quality diamonds requires skilled workers and expensive equipment. And these companies expect to make a profit. You might expect the diamond manufacturers to compete on price to protect their market share but that is not the case.
The Rapaport organization meets with rough diamond suppliers, manufacturers, and retailers to set suggested diamond prices. These prices are set every week in US dollars by carat, color, clarity, and cut. Manufacturers suggest retail prices when they sell diamonds and the suggested prices may be at a premium or a discount to the Rappaport guide.
Prices then vary within cut, color, clarity, and carat ranges when symmetry and finish, length-width ratios and fluorescence are taken into consideration. This guide is what retailers work from when pricing their diamonds.
A problem over the years was that you could buy a diamond said to be of perfect clarity, color, and cut and pay a premium price. Later, if you chose to sell that diamond, you might have been offered a lower price based on the appraisal that the gem was of lower quality. Today, with diamond certification this is not a problem.
Today, a major factor in diamond pricing is certification by the Gemological Institute of America, the GIA. When a diamond is certified you know that it is precisely the diamond whose characteristics are noted in the Rapaport price guide.
And now we come to the retailer or jeweler. The retail markup for diamonds runs around 7% to 12%. The jeweler who sets the diamond in a ring will also charge for the service and the precious metal used. And there is, again, a markup for profit.
When you walk into the jewelry store these were the factors that determined the prices of the diamonds you will look at.
Now, what you do?
Diamond Price and Value
These are suggestions for combining best price and best value in your diamond purchases.
Consider Fancy Shapes instead of Round: A round shape and brilliant cut diamond is very popular. And this shape and cut can waste a substantial amount of carat weight that was in the rough diamond. Thus, manufacturers charge more for round diamonds. On the other hand, there are many so-called fancy cuts which are very fashionable and attractive. And, because they waste less carat weight these are about 10% less expensive per carat.
Buy Loose Diamonds
The final cost of your engagement ring includes the costs of the diamond, the precious metals in the ring, the work of making the ring and setting the stone, and the profit for the jeweler. There are times that you can get a better price by first purchasing a loose stone and then talking to a jeweler about rings and settings.
Buy Just Below the Carat Price Cutoff
The price of a diamond goes up at specific carat weights. For example, try to buy a 0.95 carat diamond instead of a 1.05 carat diamond of the same quality. The price break will be very welcome.
Do Not Pay for Perfection You Do Not Need
Diamonds are graded by cut, color, and clarity. Not only does the price of the diamond go up with each increase in grade. The size of price increases gets bigger as grade improves. With few exceptions, you will be perfectly happy with a diamond that looks the same to you and has the same sparkle but is a grade or two lower than a perfect gem.
Shop for a Diamond Online
Once you have look at diamonds you may have a good idea of what cut, color, clarity, and carat weight you want. If you are going to buy a certified diamond you can be assured that when you buy online that you will get the quality that goes with the diamond grades that you want. The bottom line is that it is a low more cost efficient to manage a business selling diamonds online than it is to staff and run a brick and mortar jewelry store. The fact is reflected in the better price you will often get for buying a diamond online.
Compare Diamond Prices
There are jewelers who will match the price at which a competitor will sell a diamond. If you do a little shopping around you may find this valuable.
Do Not Settle for Less than What You Want
A small jeweler may have a limited number of diamonds in stock. There is a risk that he or she will try to sell you a diamond that is “close enough” to what you asked for not really what you want. We have supply relationships that span the globe. Although we have a large stock of diamonds for you to choose from, we are also glad to seek out the precise GIA certified diamond that you want through our contacts and suppliers.