DIAMOND PRICING

Below, we are going to discuss in detail how diamonds are priced and why they are priced a certain way. People like to say diamonds are a commodity. While technically speaking they are, they don't trade exactly like one. It is in the same "family", but it's not like trading a barrel of oil or an ounce of pure gold.

So let's get into some details below.

WHAT IS THE PRICE OF A DIAMOND?

That is like asking what the price of a house is, There are so many factors that must be considered. The pricing of diamonds is actually a very intricate and complex process. However, there are a few, somewhat basic, guidelines that can get you in the right ballpark. So let's dive in and play some ball 🙂.

DIAMOND PRICING EXPLAINED

At first, this is a bit difficult for a consumer to understand. This is because the consumer is used to hearing a final "TOTAL" price. In the diamond business, it is different. Diamonds are traded based on a PRICE PER CARAT within the diamond trade.

Formula: diamond weight x price per carat = total cost

Below is an example.

• 1.05 G color VS1 clarity Round brilliant diamond
• Industry Price Per Carat $9,800.00
• Formula: 1.05 x 9,800.00 = $10,290.00
• So the total price is $10,290.00

When purchasing a diamond, diamond dealers or manufacturers speak in terms of price per carat(PPC) NOT the total price. As rough diamonds(the diamonds state before they are cut and polished) are traded at a per-carat price, the polished diamonds are sold in a similar fashion. That way it is easier for everyone to understand what the other is charging for that specific category and this becomes the reference point. Instead of the dealer having to take out a calculator and calculate the PPC each time. Simply put, it makes the negotiating process a bit easier and saves energy for when the real arguing happens over the final price!…per carat that is 🙂.

To get a bit more into detail, manufacturers know what rough sells for per carat, and they understand how much a specific quality of diamonds actually costs(for example: if 1ct rough is trading for $900 per carat, the manufacturer understands the polished yield of that rough, and subsequently knows what the actual polished cost will be within a few percent. Assume a 1ct rough diamond yields a polished .60 diamond. The price to make any money must be labor and carrying charges plus the $900 paid...This is overly simplified but accurate. This .60 diamond better be worth more than $1666 per carat! (.60 * $1666 = $1000). Well if the manufacturer paid $900 per carat and then added expenses, he will need to sell that stone for $1835 per carat in order to make 10%($1835 * .60 = $1100), if they go into the market and search for that category of diamond, they can immediately identify if something is being sold at value or not.

Pricing and Carat Size

Carat size and the price per carat do not have a linear relationship. Say what? What we are saying is that you can't just say a 2-carat diamond is double the price of a 1-carat diamond or that a 3-carat is 150% more expensive than a 2-carat(3/2 = 1.50). Diamond pricing does not work this way.

As the carat weight of the diamond increases, the more rare it becomes, and naturally, it will become more expensive. There is no simple math formula that will tell you what the percent increase will be that can be applied across the board. But like we all learned in school, at some point, pricing is based on good old supply and demand. The larger a diamond, the fewer there are.

DIAMOND SIZE CATEGORIES

There are MANY diamond size categories. But for the sake of purchasing certified diamonds for engagement rings or other higher-priced pieces of jewelry, we are going to start with the .70 carat and work up. These diamond size categories indicate where the price per carat should be the same for each stone within that weight category and assuming the same shape color, clarity, etc. A simple example is the first category, .70 - .89. A .74 round brilliant cut g vs1 gia xxx with similar specs to a .78 carat diamond should trade at the same per carat price. The caveat is, that the closer you get to the higher weight category, the price per carat may increase within its own category to get closer to the price per carat of the next largest category.

• .70-.89
• .90-.99
• 1.00-1.49
• 1.50-1.99
• 2.00-2.99
• 3.00-3.99
• 4.00-4.99
• 5.00-5.99

Special Weights

These are our favorites! A "special weight" or "oversize" is exactly how it sounds. Most diamonds are cut to their nearest full carat weight. For instance, most diamonds have the following weights within each category.

• 1.00-1.05
• 2.00-2.05
• 3.00-3.05

These are the most common weights within their respective weight category.

So what is a "special weight" or "oversize"?

It exists when a diamond weight starts pushing the Next Larger Diamond Threshold. Perfect examples are a 1.40 carat or a 2.80 carat. Each stone is pushing the next threshold, the 1.40 is nearly a 1.50 BUT sells for less per carat than an actual 1.50. A 2.80 is nearly a 3 carat yet sells at a lower per carat price as a 3 carat. Many view these as opportunity sizes as you may achieve the visual effect of that next larger size category without paying the price for actually hitting that category. Oversizes are very desirable:

• .20
• .30
• .40
• .50
• .60
• .70
• .80
• .90-.99

A perfect example is a diamond that weighs 2.80 carats. This is a very special weight! A vast majority of the time, a cutter would rather cut a not-so-nice 3.00-carat diamond and hold that 3 carat category versus cutting a beautiful 2.80 carat. Why? Because one diamond is a 3 carat and the other is NOT. There is a appreciable price difference because of this. Remember our weight ranges above?

Now let's pause for a second and talk about the old "needle in a haystack" analogy. To find a 2.80 carat in the first place is tough, now you have to make sure it is NICE and checks all the boxes. It has to have a beautiful soft imperfection, a great cut, great material, and on and on. Now that is where it becomes the proverbial "needle in a haystack". There are so few beautiful "special weight" diamonds out there. Unfortunately, just because it may "read" well on the grading report, it does not automatically mean it is a nice diamond. IF you can find a nice oversize diamond, one that does check all the boxes, you can potentially save yourself thousands of dollars!

DIAMOND PRICING GRIDS

The industry today loosely bases its pricing on a diamond grid called the Rappaport Price List. What this list does is break down the size categories like as shown above and further breaks down the color and clarity of each weight range and assigns it a "price per carat" value.

Any diamond that is certified is traded based on the Rappaport list. However, we DO NOT want you to think you can master this list. Again, there is so much nuance that goes into the price of a diamond. It is not just as easy as pointing to a chart. It is simply a reference to get you into the ballpark. Depending on what the actual diamond is, it can trade ABOVE, AT, OR BELOW the Rappaport List suggested pricing per carat.

.70-.89

This is a real bread and butter spot for retailers. It has a great average price point range of $3500-$9,000.

As you approach the .89, the price per carat will increase because you are starting to head into the next category of size. The closer you get to the next higher category, the less availability there is in the market, and a premium price per carat is placed on it, within its own category. You can see here on Blue Nile that this beautiful .70 F VS1 is going to be considerably less than this .80 F VS1.

.90-.99

An EXTREMELY popular category! Why? Well, it looks very very similar to most 1 carat diamonds produced, yet the price is considerably less as a percentage. Take a look at this 1 carat G VS1 from James Allen and this .90 G VS1 from James Allen. This is a pretty considerable difference, yet visually it may not be so substantial. You will see a recurring theme in our writing that any diamond that weighs in the .90-.99 category for 1 carat, 2 carat, 3 carat on up(ie 1.90 carat, 2.90 carat, 3.90 carat etc), is extremely desirable, yet VERY hard to find.

1.00-1.49

This is where it can start getting a little tricky. Prices fluctuate in a fairly major way depending on a variety of factors. Firstly, a 1 carat diamond is another very popular choice for an engagement ring or a solitaire pendant. 1 carat diamonds can range from $5500-$10,000 on average(they certainly can go higher if looking for a d color, flawless stone with top specs!). However, as soon as the diamond weight reaches 1.20 carats, the price will jump a nice percentage and as we move closer to the 1.50, the price will jump even more. The 2 biggest reasons for the jump are that there is more carat weight to begin with, which means a higher price(remember our formula carat weight x price per carat), but even greater is that it becomes more rare. The larger you go. Most manufacturers will want to achieve that 1.50 carat threshold because the diamond now falls into the more expensive part of the grid, I.e. the Rapaport Price Sheet.

So if you look at this 1 carat F VS1 from James Allen and then compare it to this 1.20 carat F VS1, you will see a much different price.

1.50-1.99

A 1.50 carat diamond is a popular choice for engagement rings and other jewelry pieces because of its size. This range is a significant size that provides a balance between affordability and impact. It is not too small to go unnoticed, but not too large to be overly expensive. As the diamond weight moves more towards that 2 carat mark, it again becomes even more rare. Within this category, as we hit that 1.70 carat mark and heavier, we enter into the "special weight" zone. You will be paying more for the fact that the size is rare and now begins to really visually appear like the 2 carat size. However, it is NOT NEARLY the price of a 2 carat. So if you can find a beautiful diamond that checks all the proper boxes, it is a nice little steal! Compare these two diamonds from Blue Nile: 2-carat F, VS1 and 2-carat F, VS1.

2.0-2.99

Here you will see how carat weight and pricing are not linear. We had mentioned in the 1.00-1.49 section that the average range for a 1 carat diamond is $5500-$10,000. In the 2 carat range, it can easily range from $16,000 -$50,000 and even further. As mentioned earlier, the closer you get to that 3.00 carat, the more rare, the more desirable, and the more expensive the diamond will become(assuming the diamond is a quality stone).

3.00-3.99

A 3 carat diamond is not just a piece of jewelry, it's a symbol of love, commitment, and luxury. It's an investment in a lifetime of memories and an heirloom to pass down for generations to come. The average price range for a 3 carat diamond is $25,000-$100,000+. We happen to think this 3 carat G VS1 from Blue Nile would fit pretty nicely on someone's hand 😊.

4.00-4.99

Yes, please! Now we are getting into hero status 😊. These sizes can run anywhere from $40,000 all the way up to $200,000 depending on shape, color, and clarity. You can see here that a 4 carat G VS1 Princess from James Allen is a much different price than this 4 carat G VS1 round brilliant from James Allen.

5.00 +

Holy mama! Now we are getting really serious. A diamond of this size in virtually any shape will definitely be a show stopper if you buy a well cut diamond. We happen to love this 5 carat D VS1 from James Allen. We are pretty sure our wives would love them as well:).

Pricing Tips

• - Make sure you are comparing diamonds of the same shape
• - Make sure you are comparing diamonds with the same size, color, and clarity
• - Make sure you are comparing diamonds that are graded by the same laboratory

Different shapes, sizes, colors and clarities all have different pricing from one another each other, so make sure you are comparing apples to apples as best you can. Round stones are the generally the highest price/cost per carat, ns have a very large surface area in comparison to other shapes. A 3 carat round stone will face up much larger than that of a standard 3 carat cushion cut or asscher cut diamond(those stones traditionally have deep bottoms). The yield on a round stone is less than that of a square stone(less of the rough rock is saved in polishing when cutting a round stone than when cutting a squarish diamond), this lower yield forces the price per carat to be higher for its actual weight.