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High on the agenda of everyone purchasing a diamond is being sure you’re getting great value for money. Whichever end of the budget scale you’re at, or somewhere in the middle, it is important to know that the diamond you’re buying is worth its price tag. For many people this is a daunting prospect. Unfortunately, there are many businesses ready to take advantage of any perceived naïveté. Go in armed with some knowledge of diamond pricing, and you’ll be sure to get best bang for your buck.
Determining the Price of a Diamond – The Basics
There are a number of variables which affect the price of a diamond. Understanding each of these variables, and the effect it has on the overall price, will enable you to determine if the price you’re being charged is reasonable.
The crudest determiner of diamond price is the carat weight. Using this simplest variable you can understand the price of a diamond as:
Cost of diamond = the carat weight x price per carat.
However, this really is a crude way of determining the price of a diamond. This method really is only good for providing a broad, ballpark figure.
Determining the Price of a Diamond – The Detail
If you’ve done much looking about on Your Diamond Guru, then you will often see reference to the 4Cs of diamonds. Understanding the 4Cs is important for understanding diamond pricing.
The 4Cs stand for:
We’ve examined carat weight briefly above, but let’s look at the pricing of diamonds in more detail taking in to account all of the 4Cs. The 4Cs combined come together to determine the quality of the diamond, and thus are a more accurate grounding for price than carat weight alone.
Diamonds come in a variety of colors, and this affects the price. We’re not just talking about Fancy Colored diamonds here, so much as the degree of slight yellowness that diamonds have. This is ranked on a scale from D (no color) to Z (noticeably yellow). Generally speaking D-F are deemed colorless and G to J as near colorless. The highest prices are commanded by those which are closest to D, or naturally intense colors such as blue, yellow, pink or red.
This is further important due to the color hue, or tint. Different hues are more desirable than others. Yellowish is preferred over brown or grey for example.
Clarity refers to the number of imperfections, or ‘inclusions’, within the diamond. These are scratches, trace elements, and other factors which affect the light return or integrity of the diamond. The vast majority of diamonds aren’t truly ‘flawless’, and there are degrees in clarity which are ranked on a scale. This therefore also affects the price.
The role of the diamond cutter is a skilled combination of both art and science. How the diamond is cut determines how much of the original rough carat weight is maintained, but also the overall look of the diamond. This is a fine line to walk. As a result, the cut is probably the most complex determiner of price.
The aim of a cut is to maximize light return. This requires symmetrical facets and good proportions, along with expert finishing.
As explained, the carat refers to the weight of the diamond. Prices for diamonds are priced ‘per carat’. However, it’s not quite that simple. As carat weight increases, diamonds are put into different categories. The price per carat increases exponentially as you move up through the categories. This is based on supply and demand. There are many more diamonds available in the lower categories than in the higher ones. It’s also because diamond purchases are often emotional decisions, and this affects the perception of the higher category carat weights.
Determining the Price of a Diamond – The Finer Detail
However, determining the price of a diamond is not down to the 4Cs alone. In fact, it’s possible to find diamonds with identical 4C ratings, which are different prices. Why?
- Fluorescence: This is the tendency of the diamond, under ultra-violet light, to emit a soft blue glow. It is perceived as a defect, and therefore lowers the price of colorless (D-F) diamonds. However, for near-colorless (G-J) it can actually slightly increase the price.
- Eye Clean: As well as clarity, it’s important to note that sometimes inclusions are visible to the naked eye, and sometimes not. Obviously those which can be seen without specialist equipment will have a lower price. Additionally, the type of inclusions affect price.
- Polish and Symmetry: The rating of the polish and symmetry will also affect price.
- Precision of Cut: The cut alone is a factor affecting price, but so is its precision. A hearts and arrows cut, for example, requires absolutely extreme precision requiring the most expert diamond cutter.
- Girdle Thickness: The girdle is the narrow perimeter dividing the crown and the pavilion. When looking side on, the girdle is the widest area, important because it is where the stone is in contact with the setting. It affects durability.
Jewelers want to get the best return on each diamond they sell. As with all businesses, you get scrupulous jewelers, and others who will do anything they can to achieve the highest sale. One noticeable way that this happens is by showing you a ‘Rapaport Report’ and pointing out the price list. This shows you the highest cash value of a diamond, and so you can think you’re getting a ‘good deal’. This isn’t the reality. Understanding the report takes an expert eye. Your jeweler should be able to explain the pricing of a particular diamond in much more detail than resorting to this tactic.
There is also the overwhelming fact that the Rap List is rather crude itself. It doesn’t look at the cut of the diamond, or the certification, or retailer-specific factors such as payment terms, accuracy of grading, fluorescence and more.
The Rapaport Diamond List, or Rap List, comes out once a week on Fridays. There isn’t always significant change each week. It’s used for individually-sold diamond pricing, not packages. It covers diamonds of a certain quality (usually SI3 or above in clarity, and K or above in color). The report is a matrix aligning color against clarity within different size categories. Interpreting the Rapaport as an individual consumer is complicated, and hence I recommend other techniques.
Sensible Steps When Buying a Diamond
If you are unsure about the pricing of a diamond, a way to establish peace of mind is to compare similar diamonds from different jewelers. If you choose jewelers who are known for their fair business ethics, and industry reputation, such as Whiteflash, James Allen, or Blue Nile, then you can be sure you are making a sensible choice and a good comparison.
Furthermore, always request certification, especially if you are spending over $1000 on the proposed diamond. This backs up any claim that the jeweler is making, and provides you with written evidence. I would recommend only purchasing a diamond with an AGS or GIA certificate, for more information take a look at my piece on Diamond Certification here.
While it’s unlikely that you’ll be able to avoid the Rapaport list altogether, there are other aids to help you when determining a fair diamond price. One of the problems with Rapaport is its difficulty to understand, even as a professional. This is because the methodology behind it is somewhat cloak and dagger. IDEX Diamond Price Report however, is completely upfront about its methodology. It’s used for B2B diamond exchanges, so isn’t wholly useful for a consumer, but it can help, especially when taken in conjunction with the Diamond Retail Benchmark. Nonetheless, it can be confusing for a consumer.
Your single biggest reassurance will come from choosing a reputable retailer who will be prepared to take the time to guide you through the pricing of a particular diamond. I would recommend reading my review on Whiteflash who are particularly good at explaining the quality of both a diamond, and their setting. Another jeweler worth your consideration is James Allen.
There is no single determiner of a diamond’s price. It is a complex interaction of different variables. Understanding it requires a level of knowledge that you simply don’t need for any other purchase. While diamonds are of course one of life’s significant purchases, and therefore you expect to do more research, it can be daunting. You can be worried that you aren’t getting a fair deal, or that the diamond won’t hold its value. This is why choosing a reputable jeweler is the most important step when understanding the pricing of a diamond.
If you have any doubts about a diamond, engagement ring or dealer then please get in touch with me directly for free independent advice.
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- Have piece of mind that you didn’t get ripped off.
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