Saturday, May 25, 2013

How Diamond Prices Are Determined

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 

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 

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. 

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