Diamond Prices
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One of the proofs that I often like to cite as to the fact that diamonds are not at all an investment-worthy commodity, but rather a retail product, is the system by which they are priced.
For all diamonds, there are a few basic universal rules. First of all, diamonds are all priced per carat. So, lets say a 0.50 carat diamond has a price of $1400 per carat (that would be around a G/H SI1/SI2 at wholesale). So that diamond’s price for the stone would be $1400 * 0.50, or $700. Secondly, diamond prices per carat increase as you jump up to higher weight categories. Therefore, diamond prices increase exponentially with weight, since their prices increase both due to the increased weight and due to the higher price per carat for the increased weight category. I stress categories, because you might mistakenly believe that prices per carat increase smoothly 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. 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 looses 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.
See the charts below for a graphical representation of this price jumping phenomenon.
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In terms of pricing, there are two basic categories of diamonds — those priced off of the Rapaport diamond price list and those that aren’t.
What is the Rapaport Price List?
According to Wikipedia, Martin Rapaport “began his work in diamonds as a cleaver and rough sorter in Antwerp, Belgium. He began brokering rough and polished diamonds in New York City in 1975. In 1978, he created the Rapaport Prices List, which some say is not reflective of true prices. He has since created many businesses relating to the diamond industry, eponymously bearing his name, including an electronic trading network for traders RapNet and INDEX, and diamond-related news in print and web formats.”
The Rapaport Diamond Report price list (“Rap List”) is released weekly on Fridays, however it does not necessarily change every week. It is used as a baseline for pricing for basically all loose diamonds sold as single individual stones (as opposed to diamonds sold in parcels) generall SI3 or better in clarity and K or better in color (although the price list does offer prices for L and lower colors and I1 and lower clarities, they are rarely used in the industry). Rarely will you see a diamond with an I1 clarity grade sold with a certificate. As I discussed in the Truth about Clarity article, it is no small matter that James Allen has decided to sell GIA certified I1 diamonds online. There are very few places that do this. Intelligent companies in the industry never sell GIA certified I1 diamonds because they know they can sell them for more without the the certificate (and therefore without using the Rapaport diamond price list as the baseline). Whenever they receive an I1 clarity grade for a diamond which they had intended to receive an SI2, we will simply throw out the certificate and pretend it didn’t exist.
If you click on the image of a sample “Rap List,” you will see four separate grids. Each one is for a different size category. The four categories shown on this sample are 0.90-0.99, 1.00-1.49, 1.50-1.99, and 2.00-2.99. Each grid is a matrix of color against clarity. To find the “Rap Price” for a given diamond, you need three pieces of information: the size category, the color, and the clarity. Prices listed are always in hundreds. Lets say, for example, that you have a 1.55ct H color SI1 clarity diamond. So the “Rap Price” for that diamond would be $7,600 per carat.
But finding the Rap Price for your diamond is only the beginning of pricing a diamond. The real art of diamond pricing is figuring out the discount or premium to the Rap Price. In the vast majority of situations, diamonds trade at a discount to the Rap Price. It is this figure that two diamond dealers will haggle over. Lets stick with our 1.55 H color SI1 clarity diamond example. Those three qualities (color, clarity, and weight) only bring you to the baseline. Now things become much more subjective. Factors that might come into play in determining the discount off of the Rap Price might include: Fluoresence, Cut, Inclusion quality, Luster of the diamond material, and Color Quality. So if that diamond were an excellent cut and the SI1 was a beautiful SI1 that was way off on the side of the diamond and barely visible and the H color really looked like a G, and there was no fluoresence, then the diamond might trade at -20% or even -15% less than the Rap Price (in diamond jargon, this would be called “20 back” or “20 below”). This is the figure that is argued over. So while a seller might try to sell this diamond at “15 back,” a buyer might only wish to buy it for “20 below.” To calculate the actual price, you need to reduce that percentage from the Rap Price. So in our example, “20 below” $7,600 per carat is $7,600 * (100%-20%), or $7,600 * 0.80, which comes to $6,080. Then you need to multiply that price by the weight to arrive at the final per diamond price ($6080 * 1.55 = $9,424).
Now, take another look at the sample “Rap Sheet” from before. Take a close look. Notice anything odd? The differences between adjacent prices in each matrix are very far from being uniform. For example, the difference between a 1ct G color VS2 clarity diamond and a 1ct H color VS2 clarity diamond is a full $1000. But the difference between the same G VS2 and a 1 ct F VS2 is only $500! Don’t ask my why this is. The diamond business is rarely built on rhyme or reason. A skilled diamond dealer, though, can help you navigate these inconsistencies to find the sweet spots of value within this pricing grid. In our case, for example, it’s clearly not worth it to upgrade from an H color VS2 clarity to a G color VS2 clarity since it costs so unreasonably much to make that upgrade. And anyway, as I mentioned in the Truth about Color article, color upgrades are rarely worth the money.
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 pleasently laid out inclusion will be a prettier diamond than a G color VS2 clarity with an average cut. 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.
What about diamonds priced without the Rapaport Price List?
Just about all other diamonds that are not certified, and therefore not sold as single diamonds, are sold according to a “parcel price.” This is a price per carat for the weight of diamonds purchased, irrespective of the number of diamonds selected. Since there is no list dictating baseline prices, understanding these prices is far more nuanced and therefore requires years of experience to truly understand a parcel’s value. In fact, at Leo Schachter, there were no employees who were experts in all shapes and sizes. Parcel diamond pricing is so complex and demanding of experience, that the company was broken up by size and shape to allow managers to become experts in their limited field. There was a manager for princess and emerald cuts, round cuts 0.90ct and above, round cuts below 0.90ct, and other fancy shapes.
This is not so relevant for most of you, since you are better off buying a certified diamond unless you have someone you can trust completely who can sell you an uncertified diamond.
If you have any questions, please post them in the comments below. I will usually respond within 24 hours.
Related posts:
- Nicholas White Predicts Diamond Prices will Decrease over the next Five Years
- Platinum Prices to Continue to be Volatile
- BusinessWeek Confirms What I’ve been Arguing – Luxury Can’t Survive by Lowering Prices
- Diamond Market Watch: Polished Diamond Prices Rose 17% in 2011
I’m looking at the possibility of selling my diamond ring, having never sold a diamond before or have any idea of how the price of diamonds have increased/decreased over the years, I’m not sure where to start and read your website with great interest to get some sort of ‘guide price’ however still not really sure on how to work out a ‘rap price’.
I purchased it in 1998 it states 1.77 carat, colour grade M/N, Clarity grade SI, diamond solitaire.
Assuming all the above is correct can you help me work out the rap guide price.
Thank you
what shape is the diamond?
round
You’d probably only be able to get offers for around $2000-$2500. It sounds like it’s not certified, and I don’t know what the cut is like. Plus, since it’s not certified, it’s very possible it’s a low SI2 or even I1.
Hi,
I have been trying to determine the approximate cost of a diamond ring that I inherited when my step mother passed in 2002. It was purchased for $13,000 in 1994. This ring was stolen earlier this year from my home. I have a court date this week, Restitution Hearing 1/3/12. and have been trying to figure out the worth of the diamond to let the Court know. The description of the ring is as follows:
Ladies platinum diamond engagement ring set with two 1.5mm X 4mm tapered baguettes and two 2mm x 4 mm marquis side stones.
Major center as follows.
Diamond Characteristics;
Clarity , SI
Color, H
Carat 1.58ct
Cut Round Brilliant
I am thinking it should be worth close to $20,000. My sister who got this description from the Jeweler who sold it to my father said it would be worth close to that “even without seeing it”….I contacted him and asked him for the approximate value (written). He would not give that to me or even tell me anything over the phone stating I could have sold the ring and how would he know if it REALLY was stolen from my home. I told him I just wanted to know what it would be worth and assured him I had the ring until it was stolen and besides his giving me an approximate value did not say he was stating I had the ring. Really upset me as my father had done thousands upon thousands of dollars worth of business with this shop. I had not sold the ring, it was very special to me…as well as the gold coins that had been in my family since the late 1800′s.
Thank you for your time in this matter.
Assuming the stone is really an H SI. ANd assuming it’s an SI1, the diamond itself is worth about 13,500. Add another 3000 for the side stones and ring (and that’s a very generous estimate) and you got about 16,500.
Hi Ira- 3 questions:
1. I’m looking at getting a 2.0 carat diamond, G, VS2. How much would you estimate that would be (not including the band and paves)?
2. If I get a Rapaport sheet, how do I know what the discount is to the listed price on the sheet?
3. How accurate are Blue Nile prices and if I’m buying wholesale should I expect a match to the Blue Nile price?
Thank you so much.
-Kaplan
Hi Kaplan.
1) Why are you limiting yourself to only G VS2?
2) You can’t know. This is only known by people actively trading diamonds day to day. I wouldn’t know what discounts are these days until I call up friends in the business.
3) I’m not sure what you mean by “how accurate”? If you’re going to someone who bills himself as a “wholesaler” his prices should be better than online prices, otherwise, what’s the point?
Thank you for the responses:
1)I’m limiting myself to G VS2 because my girlfriend prefers size over higher quality. I would rather go to F and get a slightly smaller diamond. However, she prefers the larger diamond and I prefer not to go worse than G V2.
2) Thank you.
3) Yes, that is exactly what I meant. I’m speaking with a couple wholesalers and I’m curious if their price should be below blue nile. “The point” of paying the same price to a wholesaler is that you actually see the diamond and verify it’s quality and cut in person rather than ordering online.
Any suggestions or further insights into 1. or 3. are appreciated.
Thank you.
1) If that’s the case, then you should very seriously consider going to an H SI1. See my articles on Color and Clarity (under the “Truth About..” menu heading)
3) You can see the diamond if you use James Allen instead of Blue Nile (See my reviews of the two shops. I highly recommend JA over BN). However, even buying from BN will get you better long term service than a wholesaler. Wholesalers want to get your money and then kick your ass out the door and never see you again. If you buy from BN or JA, you’ll have a long return window. I know JA offers free yearly ring cleanings. There’s other stuff, too (like future upgrades, etc). So to pay the same price from a wholesaler just isn’t worth it.
This is the stone I would recommend for you:
http://www.jamesallen.com/diamonds/H-SI1-Premium-Cut-Round-Diamond-1442074.asp
or
http://www.jamesallen.com/diamonds/H-VS2-Ideal-Cut-Round-Diamond-1445682.asp (if you’re really nervous about the SI1, but I believe it will be eye clean)
Hi,Ira,
I had this offer came to me during the relatives gathering,light fancy yellow,SI1,pear,7.06 carat,no cert,$70k,worth considering?
thanks
Hi George. Seems expensive to me. Especially considering that it’s not certified.
Hi Ira,
I did get a discount after your advice and closed deal at $61k,hope the damage is not much,am i right?
regards
Just foud your site…very helpful. I am looking for a set of diamond earings for my wife…would like something over 1.5 tcw…it my hunt so far I find…either very low quality stones for 2000-3k or higher quality for 8-10k…what is in between…I am trying to stay around 4-5k.
Thanks for any help!
Hey Chris. here’s a great pair for you:
http://www.jamesallen.com/diamonds/matching-pairs/view.asp?item1=1121574&item2=1443626
Hi Ira,
Thank you for a very informative webpage. I am currently in the market to buy a diamond eternity band. It consists of three rows of diamonds ~ two outer rows of rounds and a center row (that is inset), of horizontally set baguettes. The weight of the rounds is 2.70 carats. The weight of the baguettes is 1.84, totaling a weight of 4.54 carats. I was told the quality was GVS + SI. It is set in white gold. I was quoted a price for a ring that was already made in a size 6 1/2. The stones looked very clear and white. Although I am not trained, they appeared to be clear of any inclusions or carbon flecks. The jeweler that made my engagement ring said he could match quality/carat weight and identical style for a lesser price.
What do you think is a fair market value to pay for this ring? Please share your thoughts.
Thanks so much in advance,
Jami
Hi Jami. I’m sorry, but I’m not really up to speed on market prices for small baguette diamonds. Plus, there are a lot of external factors that go into pricing a ring like this such as the price of the metal plus the labor involved in setting all these stones.
Hi Ira!
Thank you so much for your response! I’m so sorry. For whatever reason, I was unable to view it. I thought you never received it!
I appreciate your candor about pricing small diamonds. My husband and I have seen the same ring on line and in showrooms (it seems to be a popular style). We have gotten different pricing from two local jewelers, stating they can give us the same exact quality. However, there is a price discrepancy of $700. We are concerned that with the lesser price, we will also be getting lesser quality.
I really appreciate your time ~ and patience! If you have any tips, I am open to suggestions.
My best to you and your lovely family!
Jami
Ira,
Just started looking for stud earring for my wife. She has a pair of .5 ct studs now and wants to move up to ~1.0 ct (2.X tw). I was thinking of $2-3k but could go higher if necessary. What would you recommend? 0.9 ct round SI1 G/H seems to well beyond my preferred price range… Thoughts?
Hi Mark. YOu can’t even get close to 2cttw for $3000, unfortunately.
Hello Ira:
Then how much should be expected to pay for 1.0 ct each earrings, same colour and clarity as above? How about o.99 ct. each earring?
Thanks..
about $14,000 for a pair of H SI1. But that’s overkill. J SI2 is good enough. That would be closer to 10K.
Hi Ira, thanks for a great website! Really helpful.
Was hoping you could give me an answer on these diamonds I am wanting to buy:
1. GIA grading: Princess 0.46 carat, G/VS1. Polish very good, Symmetry good, Fluor none. $1630
2. GIA grading: Princess 0.51 carat, H/VS2. Polish excellent, Symmetry very good, Fluor none. $1730
You think these prices are fair? Would you suggest which may be a better stone? I need to give an answer tomorrow to buy or not so a reply would be most helpful.
Thanks again for all your info. Much appreciated.
Hi Seba. If those prices are in NZD, then they’re fine . Otherwise, they’re a bit expensive. Compare with these:
http://www.jamesallen.com/diamonds/H-VS1-Premium-Cut-Princess-Diamond-1417379.asp
http://www.jamesallen.com/diamonds/H-VS1-Premium-Cut-Princess-Diamond-1419481.asp
http://www.jamesallen.com/diamonds/H-VS1-Ideal-Cut-Princess-Diamond-1433762.asp
http://www.jamesallen.com/diamonds/H-VS1-Ideal-Cut-Princess-Diamond-1420998.asp
Hey,
Thanx for the info . It was really informative.
I live in nyc and i’m now shopping for the right diamond but of coarse I’d like to get a decent deal and not get robbed of course.
Any suggestions?
Your help would make me sleep better at night.
Tx
Sure thing, Lennie. Send us an email using the “contact me” form linked to from the black menu bar above. Let us know what you’re looking for and what your budget is, and we’ll be glad to help you out!
Ok, so how do i go about getting the best price? Most of the Mall jewelers refuse to come down in price stating, “they are set in stone”. Where can i go to make an offer on a certified diamond that will be even considered?
Hi BuyingForMyLady. Please visit the site again, and click on the “Got Questions?” Link and send me a private message with some more information about what exactly you’re looking for. I’ll help you find the best price possible.
Ira