How Diamond Prices are Determined
Pricing most products is quite easy. Determine how much it costs to make the item, how much it costs to market that item, and then mark it up by 15 – 30% or more. Simple, right? Well, pricing diamonds isn’t quite that simple. There are many factors that are considered when diamonds are priced.
Diamond prices are determined first by adding the cost of the rough diamond, the cost of cutting the diamond, and all other costs necessary to turn the rough diamond into a marketable diamond. Depending on the importance of the diamond, an independent company may be called in to certify the grade of the diamond based on color, cut, clarity, and (weight or) carats.
To market to market
At this point, the diamond becomes more expensive each time it changes hands, until it finally reaches a retailer, where the price is raised a bit more. Before reaching the retailer, however, the diamond must travel from the mine, to the cutter and polisher, to the independent grading company, and then to the Primary market. Once it has reached the primary market, it will be purchased by diamond dealers and wholesalers, and from there it will be sold to retailers.
As you can see, the earlier you can purchase a diamond in the process, the lower the cost of the diamond will be – but not the value. The value is based on what the diamond will sell for in the market place – through a retailer.
Certificate or Appraisal - which one best suits your needs?
If you own a diamond and you have no idea how much it is worth, you can have it appraised but you will be better off obtaining a certificate through GIA – Gemological Institute of America. With the information on this certificate, you can use a cutter’s guide to accurately determine what your diamond is worth.
There are also many diamond price calculators available. These can be found on the Internet, and many diamond dealers use these as well. You must realize, however, that before you can accurately price a diamond without a Diamond Grade Report, you need to know quite a bit about diamonds, such as different cuts, clarity, color, and weight – and how each of those aspects adds to the value of a diamond, or decreases the value of the diamond as the case may be.
Again, you will be better off if you get a Diamond Grading Report (the diamonds certificate) and use that information to look up the price in one of the guides that the diamond cutting industry uses. This will give you the most accurate value of the diamond in your possession, or of the diamond you are considering purchasing.
Shop price comparison before buying diamonds
If you have started the daunting task of shopping for diamonds online, you have probably discovered how difficult it is to figure out who has the best price for similar stones. Going from site to site, running individual searches on each one, then trying to compare results in several different browser windows - sound familiar?
There are consolidated diamond shopping search engines out there and you are better off to use one of these when looking for the best diamond price. Make sure your search for a diamond shows the additional details that the generic search engines are not able to display. If you can't at least see the cut, color and clarity of diamonds side by side, then the search results are useless. Search engines which only show you the weight (carats) of the diamond aren't going to give you the best price. You need to know how the diamond is graded as well. You can't compare apples to oranges and expect to figure out which is the better deal.