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.

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.

If you own a diamond, and you have no idea how much it is worth,
you can have it appraised, but the appraisal may not be accurate.
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 on the diamond, 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.