Before you get into pricing and what is a fair deal, you have to know what you want and how to be sure you are getting what you are paying for. You need to make sure you are following the process to ensure you aren’t getting scammed. Its hard figuring out how much you should spend on a diamond. Its just as hard figuring out how to get the best bang for your buck.
1) Certification – This is the most important step. It is an absolute must if you are spending more than $1,000 on a diamond. The purpose of buying a diamond with a certificate is to have peace of mind that you are getting what they claim. The only certificates that provide that are from the GIA and AGS laboratories. They are the gold standards for the diamond industry.
2) Quality – Now that we know which certificates to use, we need to understand all the qualities listed on the certificate and what we should do with that information. You may have heard of the four Cs of diamonds and we have articles on each of them: Color, Clarity, Cut and Carat.
I understand that this gets a bit confusing trying to balance the different qualities. If you prefer more personal help guiding you through the qualities, feel free to contact us.
3) Pricing – We get into the deep background below, but the easiest way to figure out the price is the same way you do with anything else. Shop around. Blue Nile and James Allen are the industry leaders when it comes to diamonds (like Amazon is for many products). A store will always be more expensive than what you can find online, but figure out the right baseline and then you can decide if its worth paying premium “X” for the added value you feel you are getting from the store.
The Importance of Categories
I stress categories, because you might mistakenly believe that prices per carat increase continuously as weight is increased, but this is not the case.
Since diamonds are a retail product driven more by emotion than reason, a 0.99ct diamond is worth only about 1% more than a similar diamond weighing 0.98ct. But a 1.00ct diamond is worth about 20% more than a similar 0.99ct diamond. Why is that?
Maybe because now you can say it’s a “one carat diamond,” or maybe because now it’s three full digits. Who knows. But with diamonds, it’s all about feelings. This little quirk about the business is the sole reason there are so many poorly cut diamonds out there.
How Cutting Impacts Price
You could imagine very easily that if there’s a 20% price jump from a 0.99ct diamond to a 1.00ct diamond, the cutter who loses that 0.01ct trying to make a prettier stone will lose his job.
Perhaps with the nicer cut it will only be worth 15% less instead of 20%, but either way, it’s a big loss. This kind of price manipulation by maintaining weight categories has been taken to an extreme by many of the world’s largest diamond companies.
They will take rough diamonds with diameters that really should have only been used to make a 0.75ct-0.85ct diamond (with the proper cut to maximize brilliance), but instead will keep them over 0.96ct to sell them as 1ct diamonds to the major jewelry chains like Kay or Zales.
Even though they will have to sell these diamonds at steep discounts compared to well cut 1ct diamonds, they are still sold at a significant premium to well made 3/4ct diamonds.
How Colour and Clarity Impacts Diamond Price
One interesting outcome of the entire business being based on the Rap List is that far too much weight is given to color and clarity in determining price.
Objectively speaking, and G color SI1 clarity that is an ideal cut with a pleasantly laid out inclusion will be a prettier diamond than a G color VS2 clarity with an average cut. And a G SI1 super-ideal stone (like a Brian Gavin Signature stone) will be all the more beautiful.
If we continue with this case, lets say for a 1 ct diamond, a G SI1 that was an ideal cut (and everything else was fine), the price would be approximately “25 back,” or $6100*0.75 = $4575 per carat. But a G VS2 with an average cut might go for “35 back,” or $7200*0.65 = $4680.
By all accounts, the “25 back” SI1 is a much much prettier diamond than a “35 back” VS2, yet the VS2 is still more expensive.
This is why it is so crucial to have someone helping you along the way specifically regarding how to value the different factors that go into pricing a diamond. If someone knows what they are doing, they can really find tremendous value out there.
If you still feel hesitant navigating the diamond buying process on your own, feel free to contact us and we’d be happy to give you some more personal advice.