Are you perplexed about diamond prices? Don't worry because that's how most people feel when trying to make sense of the market. Fortunately, we've got your back and this guide will help you make sense of diamond prices. As a matter of fact, there are a lot of subtle factors that affect the price of diamonds.
In other words, there are many more factors beyond the 4Cs that contribute to the price of a diamond. Although this may be true, we've been at this game long enough to help you unravel the mystery. Be sure to Contact Us if you have any questions or would like help searching for diamonds.
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Do you know what buying a diamond, investing in the stock market, and gambling in a casino have in common? "That's right sucker, the game is rigged for the house to win." Which doesn't mean that you still can't win the game. You just need to be more savvy than the average consumer. Lucky for you, we're going to teach you all about diamond prices.
Let's face facts. You're probably not a professional diamond buyer with 30+ years experience. Because if you were, you'd be me (and then, you wouldn't be you). It took me years to fully understand and appreciate the subtle factors influencing diamond prices. Most people jump into the game without understanding the rules and pay dearly for it, but not you.
Spoiler Alert: Only the naive believe that calculating diamond prices is as simple as taking Carat weight, Color, Clarity, and Cut quality into account. Would you like to be one of the few people who understand how diamonds are priced?
Most people think that the price of diamonds with the same paper grade should be comparable. It seems to make sense that the price of all one carat, GIA Excellent cut round diamonds of comparable color and clarity should be similar in price. After all, it's easy to compare the price of other consumer goods like cars, computers, and electronics. However, there are a lot of hidden factors that contribute to the market price of diamonds. It's not as simple as calculating the carat weight of a diamond by the price per carat recommended in some diamond buying guide like the Rap Sheet.
Let's Start with the Basics of How the 4C's Affect Diamond Prices.
Imagine that your girlfriend tells you that she's always dreamed of wearing a one carat diamond.
And the last
schmuck guy she was dating was too cheap to buy her one. On top of that, her best friend on Instagram is showing off a one carat diamond ring from Tiffany & Co.
You might surmise that the bar has been set at the one carat mark. With that in mind, you set off to determine how much a one carat diamond costs.
If you're like most people, that means that you'll run a search for one carat diamonds on these popular sites:
Pro Tip: Set up your diamond search for maximum success by using my preferred range of selection criteria:
Basic Diamond Search Criteria:
For the sake of this diamond price comparison, we'll focus on 0.90 to one carat round brilliant ideal cut diamonds which are VS-2 clarity and G-color with an overall cut grade of AGS Ideal or GIA Excellent and the proportions outlined above.
Professional Insight: Standard GIA Excellent and AGS Ideal cut diamonds cost less than Hearts and Arrows Super Ideal Cut diamonds because less time is spent polishing them.
The majority of standard GIA Excellent and AGS Ideal cut diamonds will exhibit more light return than non-ideal cut diamonds. That just makes sense, right? Because the combination of ideal proportions and excellent polish and symmetry will create that effect. However, standard ideal cut diamonds still tend to leak more light than hearts and arrows diamonds. That's because most standard GIA Excellent and AGS Ideal cut diamonds are not polished to the higher degree of optical precision.
Hearts and Arrows Ideal Cut Diamonds deliver the next step up in sparkle factor and light performance. H&A diamonds are polished to a higher degree of optical precision. Which produces sparkle that is more vivid and intense along with a higher volume of light return. Standard ideal cut diamonds can't compete. You'll see the difference in a side-by-side taste test.
The Hearts and Arrows Ideal Cut diamonds referenced below cost more than standard ideal cut diamonds. That's because it takes about 4X longer to polish these diamonds to the higher degree of optical precision. More diamond rough is also lost during the cutting process. The higher degree of optical precision will produce a higher degree of light return. The sparkle factor will also be even more vivid and intense. The odds are that you'll see an appreciable difference in visual performance.
Pro Tip: Not all Hearts and Arrows diamonds are created equal. You will see varying degrees of optical precision and consistency across the brands. Higher degrees of optical precision tend to command higher diamond prices. However, the production volume of each manufacturer and their position in the supply chain will also affect diamond prices.
In the world of diamond cutting, there are two cutters who are Masters of the Game:
Brian Gavin and Crafted by Infinity produced most of the Hearts & Arrows diamonds for our Private Label Collection. In my professional opinion, their production is the finest in the world. It simply doesn't get any better than this. These diamonds are the Lamborghini of Light Performance. Twinkle. Twinkle Little Star. Sparkle. Sparkle. Brighter & Brighter.
Spectacular Sparkle & Light Performance Worth Paying For.
Hearts and Arrows diamonds represent the best value because they deliver the highest volume of light return and sparkle factor which is more vivid and intense. Standard AGS Ideal and GIA Excellent cut diamonds might cost less, but they are more likely to leak light and produce sparkle which is less impressive.
I'm going to let you in on a little secret. It's right about now that most people make the biggest diamond buying mistake of their lives.
Which is assuming that the 1.01 carat, G-color, VS-2 clarity, GIA Excellent cut diamond from Blue Nile (left) is going to deliver the same light performance as the 1.11 carat, G-color, VS-2 clarity, James Allen True Hearts diamond (below).
It's not just because those two diamonds are in different classifications of cut and performance.The difference in light performance is clearly evident if you know what to look for. I'll give you a hint. Look at the difference in contrast brilliance in the arrows pattern and how evenly light is reflecting under the table facets.
And that's why the price per carat (PPC) for the James Allen True Hearts diamond is 12.74% more expensive than the GIA Excellent cut diamond from Blue Nile.
Check the math: (8027.02 - 7120.21)/7120.21 = 0.1274 * 100 = 12.74%
Even though both diamonds are technically one carat, G-color, and VS-2 clarity with an overall cut grade that seems comparable at first glance. The difference in the price per carat is due to the higher degree of optical precision.
The question is whether it's worth it to you to pay 12.74% more for the higher volume of light return and more vivid sparkle factor.
Hidden Factors that extend beyond the Overall Cut Grade, e.g. AGS Ideal or GIA Excellent cut.
The reason that this 1.11 carat, G-color, VS-2 clarity, James Allen True Hearts diamond costs more is because the diamond cutter spent more time polishing it to a higher degree of optical precision.
As you can see, the arrows pattern is exhibiting stronger contrast brilliance. Which gives the diamond a lot more sizzle because of the bolder contrast between the light and dark sections.
At the same time there are reasons why this James Allen True Hearts diamond is priced the way that it is.. For one thing, there are some variances in the size and shape of the hearts. Notice how the hearts in the relative 12 and 6 o'clock positions are a little smaller than the rest. In fact, the heart at six o'clock is a little smaller than one in the twelve o'clock position.
In addition, if you look very closely, you will see that the tips of the hearts are bending ever-so-slightly. Which indicates a difference in the length of the lower girdle facets.
And the light pink sections under the table facet in the Ideal Scope image on the left indicate a slight amount of light leakage. All of which could be improved if the cutter spent a little more time polishing the diamond to a higher degree of optical precision. Then again, time is money and not everybody wants to pay the higher price for better performance.
One look at the Ideal Scope image for this 1.054 carat, G-color, VS-2 clarity, Brian Gavin Signature Hearts and Arrows diamond and you know that it's returning a higher volume of light return. After all, it doesn't show any of those light pink sections under the table facet that indicate light leakage:
Notice how evenly light is reflecting under the table facet and the even distribution of hue and saturation. The hearts pattern is also more consistent in size and spacing and the tips of the heats are not twisting. Thus, we know that this diamond exhibits a higher degree of optical precision. Which is why it costs more per carat than other H&A diamonds.
Now that you know how diamond cut quality affects price and performance, you might be wondering about the difference between Black by Brian Gavin and their Signature diamonds.
The 1.054 carat, G-color, VS-2 clarity, Brian Gavin Signature diamond costs $8,654.66 per carat.
While this 1.03 carat, G-color, VS-2 clarity, Black by Brian Gavin diamond costs $9,111.65 per carat.
Using the same formula from before: (9,111.65 - 8,654.66)/8,654.66 = 0.0528 * 100 = 5.28%
We can determine that the Black by Brian Gavin diamond is about 5% more expensive than the Brian Gavin Signature diamond.
The reality is that only you can decide what level of sparkle factor and light performance you're willing to pay for. But it seems to me that the difference in light return and the intensity of sparkle is worthy of your consideration. Especially when you consider that this is the kind of thing that distinguishes one ideal cut diamond from another.
Now that you know what to look for, I'm certain that you can see that this 1.03 carat, G-color, VS-2 clarity, Black by Brian Gavin diamond exhibits an even higher degree of optical precision.
Black by Brian Gavin diamonds cost more than other diamonds with similar characteristics, such as carat weight, color, and clarity. But that's because the diamonds spent more time on the wheel being polished to a degree of perfection that is beyond imagination.
The first Black by Brian Gavin diamond that I saw took my breath away. It was absolutely incredible to look at that diamond through a loupe. The precise nature of the faceting and the virtual facets that it produces blew my mind. Which says a lot considering how many diamonds I've evaluated in the 30+ years I've been in this business.
Based on my experience, hearts and arrows diamonds are cut to different standards. Which is why I break them down into classifications based on varying degrees of optical precision:
It's important to understand the differences in cut quality and performance. Because this is one of those times where you're only going to get the sparkle factor that you pay for. The higher the degree of optical precision, the less the diamond is going to leak light and the more intense sparkle you will see.
H&A diamonds in this cut class will exhibit a very good pattern of hearts and arrows. Which is kind of a funny thing to say when you consider that we're talking about diamonds in the Top 1% of the annual production for round brilliant cut diamonds.
These diamonds will exhibit excellent patterns of hearts and arrows. I refer to these diamonds as Super Ideal Hearts & Arrows diamonds because the optical precision is clearly better than standard H&A diamond production.
Some people have argued that there is no such thing as a super ideal cut diamond. However, that wrongly assumes that all hearts and arrows diamonds are cut to exhibit the same degree of optical precision. Which is something that
any idiot anybody can see is not true. Just look at the difference in the consistency of the hearts patterns.
This is the level of diamond cutting that blows my mind. I literally had to create a new cut classification for this level of hearts and arrows diamond.
Hats off to Brian Gavin for achieving the highest degree of optical precision that I've ever seen. Black by Brian Gavin when only the best will do.
By the way, this is what we chose for my son's engagement ring (pictured left).
It practically goes without saying that 30+ years of experience as a diamond buyer at the trade level enables us to buy direct from practically any diamond cutter in the world. We chose Black by Brian Gavin because the sparkle factor and light performance are mind blowing even from my perspective.
The price of the diamond in the center should not dictate the true significance of an engagement ring.
Nonetheless, we live in a world where money is a symbol of value. Therefore, we trade diamonds for dollars when we buy an engagement ring. Which means that you might be wondering how much to spend on an engagement ring.
An old advertising campaign sponsored by De Beers suggests a minimum of two months salary. The supporting premise of the idea is that if you and all your friends work for the same company, doing the same thing, getting paid the same relative amount of money, all spend two months salary on an engagement ring, then all your wives will be happy.
But that's not very realistic in this modern age now, is it?
Obviously, the price of diamonds is going to factor into your decision about how much to spend on an engagement ring.
Just like the old adage about wanting champagne on a beer budget, it helps to be realistic about whether or not you can afford what you want, or whether you need to adjust things accordingly.
I will never sacrifice on diamond cut quality since that will negatively impact sparkle factor and light performance. However, I am likely to adjust minor factors like carat weight, color, and clarity since those things are more subjective.
Pro Tip: Experienced diamond buyers know that our perception of diamond color is more important than the actual color grade. They also know that a VS-1 may not look better than a VS-2 to the naked eye since both will face-up eye clean.
The simple truth is that you're always going to pay more for better quality.
A new Porsche GT3 costs more than a 911 turbo and that will cost more than a standard 911 non-turbo.
You'll also benefit from a completely different level of performance with each step up the ladder.
It's true of cars and it's true for diamonds.
From the perspective that you're only going to do this once in your life, I personally think it makes sense to spring for the highest cut quality you can afford. It's totally worth it because the difference in sparkle factor will show up from across the room.
Seriously. I used to conduct blind taste tests with my in-store clients and they could always tell the difference between the different versions of ideal cut diamonds. Especially when I asked them to step back a few feet and look at the difference in sparkle factor from 3-10-20 feet back.
You might have noticed that the prices listed in the price comparison above are per /carat. That's because trade members quote diamond prices per carat.
Here's how to calculate the price per carat of a diamond:
Simply divide the cash/wire transfer price by the carat weight. For example, the 1.03 carat, G-color, VS-2 clarity, Black by Brian Gavin Hearts & Arrows diamond is selling for $9,675.00 which will be discounted to $9,385.00 for payment via cash/wire transfer.
Divide the cash/wire price by the carat weight to determine the price per carat:
e.g. $9,385.00 / 1.03 carats = $9,111.65 price per carat (PPC).
The reason why people within the diamond industry price diamonds per carat is because most dealers are working off the Rapaport Diamond (price) Report as a starting point.
This is a what the Rapaport Diamond Report or Rap Sheet looks like for a recent month in 2020.
The prices indicated on the Rapaport Diamond Report reflect their opinion of HIGH CASH ASKING PRICES in the wholesale market. Which means that this is an indication of Wholesale Diamond Prices.
The Rap Sheet is divided into sections for the most popular ranges or "magic sizes" of carat weight.
The price per carat for each combination is stated as numbers, e.g. 108 and you'll need to add the appropriate number of zeroes to the end to determine the price per carat for diamonds in that weight class.
Note that there are indications that suggest that prices might be higher for diamond carat weights that represent the high end for each spectrum of carat weight. For example, the price per carat of a 1.25 - 1.49 carat diamond might be 5-10% higher than the PPC for a 1.00 carat diamond.
Pro Tip: Diamond dealers often refer to diamond carat weight in their relationship to quarter carats. For example, a one carat diamond is commonly referred to as 4/4. With regards to diamond price variables, you might see something like this on diamond price reports: "1.25 to 1.49 Ct. may trade at 5% to 10% premiums over 4/4 prices."
Diamond Price Chart:
The Rap Sheet is essentially a diamond price chart like the example provided below.
To calculate the price of diamonds (in this specific carat weight) you multiply the carat weight by the price designated for each combination of clarity and color.
For example, to determine the price for a D-color, Internally Flawless (IF) clarity, diamond, you would multiply the carat weight by 26,000 (adding in the appropriate number of zeroes at the end).
As stated previously, diamond prices are stated by carat weight.
This 0.50 carat, E-color, VS-1 clarity, Black by Brian Gavin diamond is selling for $2,250.00 which means that it has a Price Per Carat (PPC) of $4,500.00
e.g. 2,250.00 / 0.50 = 4,500 PPC
Using the PPC as a baseline for price, Brian Gavin would price the diamond by calculating the PPC by the carat weight:
0.50 * 4,550 = $2,250.00 cash / wire price.
Remember that the Price Per Carat (PPC) of Diamonds increases dramatically by carat weight. Diamond prices are represented in tiers of carat weight.
The diamond price comparison chart below demonstrates how diamond prices increase by carat weight. The data is based on diamond carat weights that represent the most common "magic sizes".
The carat weights are in line with the price categories indicated in the Rapaport Diamond Report, e.g. 0.10 carats, 0.15 carats, 0.20 carats, 0.33 carats, 0.40 carats, 0.50 carats, 0.70 carats, 0.90 carats, 1.00 carats, 1.50 carats, 2.00 carats, 3.00 carats, 4.00 carats, and 5.00 carats.
As you can see, the price per carat for a 0.10 carat diamond is much less than the PPC for a 5.00 carat diamond of the same color and clarity. The reason for this is pretty simple. It requires a much smaller diamond crystal to produce a ten pointer than it does a five carat.
Which brings up another point. It takes a 0.25 - 0.30 carat piece of diamond rough to produce a 0.10 carat ideal cut diamond. Whereas it will take about a 10 - 12 carat piece of rough material to produce a five carat ideal cut diamond. There is a substantial difference in the amount of diamond rough wasted during the production of diamonds of different carat weights. The amount of rough waste factors into the price of diamonds just as much as the cost of production.
The short answer is that they're saying that the diamond price is 20% off the list price on Rapaport.
However, that doesn't really mean anything.
Well, that's not quite true...
It could mean that you're about to get screwed (if you don't know what you're doing).
Because diamond prices are a reflection of the characteristics.
Imagine this Diamond Price Scenario in Relationship to Rap:
What if diamond prices are based on something like this scenario:
Which makes perfect sense because diamond cut quality affects price by up to sixty percent.
So when a jeweler says that a diamond is priced 20 back of Rap what they're really saying is that the diamond is being sold at a discount that is proportionate to the characteristics.
Which means that calculating diamond prices is not as simple as the outline above. The reason why is because there are other factors that affect the price of a diamond.
How Diamond Characteristics Factor into Price:
There are many hidden factors that influence the price per carat of diamonds. Not the least of which is diamond cut quality which can affect the market price by up to 60%.
I'm not talking about the basic overall cut grade of AGS Ideal or GIA Excellent. Unfortunately, the gemological laboratories do not take optical precision into account as part of the overall cut grade. We use the following reflector scopes to judge optical precision and light performance:
These special scopes enable us to judge the cut grade of the diamond beyond the basics of proportions, polish, and symmetry. The value of the diamond will be affected by factors such as:
How Diamond Clarity Characteristics (Inclusions) Affect Price:
It stands to reason that the inclusions within a diamond will affect the price. After all, some clarity characteristics are more or less desirable than others.
It's not enough to look at the clarity grade.
You have to consider the nature of the inclusions:
Do the Inclusions Present Any Sort of Durability Issue?
Diamond prices are affected by much more than the basic 4C's. Hidden factors such as the nature of the inclusions can have a dramatic effect on price.
Each diamond clarity grade represents a range or spectrum of inclusion. As such, you can have a VS-2 clarity diamond which is right in the middle of the spectrum. Or you might be looking at a VS-2 clarity diamond that represents the higher or lower end of the range.
In addition, certain types of inclusions are more or less desirable than others:
An Easy Reference for Inclusions Listed in Key to Symbols.
The list of acceptable diamond clarity characteristics is much shorter than the list of inclusions to avoid. You can find examples of all these inclusions types within diamonds of all clarity grades with exception of Flawless and Internally Flawless.
This article on Diamond Clarity Characteristics contains photographs and examples. It stands to reason that the price of a VS-2 clarity diamond that contains any of the inclusions in the right column should be less expensive than a VS-2 clarity diamond that does not contain those inclusions.
In addition, a VS-2 clarity diamond that contains only crystals is worth more than one that contains other inclusions included in the list on the right. However, it goes without saying (but I'll say it anyway) that the size, location, extent, and visibility of the inclusions also factors into price.
Once again, it is important to realize that each color grade represents a range or spectrum of hue and saturation. In addition, the color grade of a diamond may be influenced by shades or undertones.
This 1.54 carat, F-color, Internally Flawless clarity, oval brilliant cut diamond is a good example.
Here is a screenshot of the diamond details page. Notice that the diamond is graded as F-color:
The Dealer Listing (behind the scenes) Indicates Shades of Brown:
The supplier for this diamond indicates that it exhibits shades of brown within the dealer listing:
Giving Credit Where Credit Is Due:
The supplier for this diamond mentioned the brown shade of this F-color diamond even though the GIA did not. In addition, the vendor mentioned the brown undertones to my client. That way she could make an informed decision whether to buy it or not.
What does "No BGM" mean?
Diamond suppliers use the term "No BGM" within the listing details to specify that the diamond does not exhibit any Brown or Green undertones. The "M" designates that the diamond is not Milky or cloudy in appearance.
It is not common for diamond vendors online or retail jewelers to use "No BGM" in their listing details. However, this is something that you can ask them to verify with the supplier and/or physically check if the diamond is in-house.
There is NO SUCH THING as a Diamond Grading Certificate. The gemological laboratories do NOT certify anything. The American Gem Society Laboratory (AGSL) and Gemological Institute of America Gem Trade Laboratory (GIA-GTL) issue a document that reports the characteristics of the diamond at the time it was graded.
Nobody is certifying anything and thus a diamond grading report is not a certificate of authenticity or quality.
Diamond Prices for AGS & GIA Graded Diamonds vs EGL, GCAL, IGI, ETC.
In my experience, all gemological laboratories are NOT created equal.
From my perspective, the American Gem Society (AGS) and Gemological Institute of America (GIA) are Top Tier Laboratories. Everybody else is a second or third tier laboratory. In my experience, most trade members will agree with this assessment. Except for those who are "Playing the Paper Game."
Have you ever written or said something that you knew was going to haunt you?
Well, this is one of those times. I'm 99.999% positive that this is going to rise up and bite me in the @ss.
Oh well, it's not like I'm not accustomed to receiving hate mail from trade members.
Look. There's a reason why diamonds graded by labs other than the AGS or GIA are priced significantly less than AGS/GIA graded diamonds of the same carat weight, color, clarity, and cut quality.
The reason is simple. In my experience, other gemological laboratories (with exception of the HRD Belgium) do not grade by the same standards.
There. I said it, let the $hit $torm begin.
But trade members know that it's true.
And a lot of them yield high profits by buying AGS/GIA graded diamonds and
flipping submitting them to other labs in hopes of receiving a higher color or clarity grade.
Now. I'm not saying that this is what happened in this case:
There were a lot of retail jewelers caught up in the string of lawsuits filed in response to allegations that EGL graded diamonds are not up to GIA grading standards.
Here's a screenshot for some consumer inquiries about whether or not they were ripped off by buying EGL graded diamonds:
I like the summary at the bottom. "This just in from JCK" (Jewelers Circular Keystone, a trade magazine) "EGL graded the diamond G, VS-2. A subsequent GIA report came in J-SI2."
Now. If they happen to be talking about a one carat diamond, the difference in the Price Per Carat between a G-color, VS-2 clarity diamond and a J-color, SI-2 clarity diamond is $3,500.00
Which is why a lot of diamond dealers play the paper game. Imagine how much money a diamond dealer can make by buying AGS/GIA graded diamonds and
flipping submitting them to a second or third tier lab for grading.
For your protection:
If you're familiar with the Kelly Blue Book, then you know that the calculation to determine the value of your vehicle begins with a base price. Then the price or valuation changes in accordance with different model types and available options:
What most people don't know about the Kelly Blue Book price is that it's only the beginning of the valuation process. Once the base price for the model selected is determined, then the real fun begins.
While the Kelly Blue Book accounts for the overall condition of the vehicle, the reality is that factor is largely subjective. You might say that the overall condition of the vehicle is similar to the overall cut grade of a diamond.
But neither the Kelly Blue Book, nor the Rapaport Diamond Report, take optical precision into account. Which for diamonds is the consistency of facet shape, size, and alignment from the perspective of 360 degrees.
There's also IDEX and other less popular diamond price reports. However, the majority of diamond dealers use Rapaport.
And there's also the Little Black Book of Diamonds by Brian Gavin which has nothing to do with diamond prices, but is super cool and you'll learn a lot by flipping through it.
If you've read this article to the end, then you understand diamond prices better than most people. In fact, you have a better idea of what affects diamond prices better than I did in the beginning of my career.
You're less likely to be taken advantage of and you're not likely to overpay.
At the same time, you also know that diamond cut quality can affect diamond prices by up to 60%.
And that's HUGE.
Because diamond cut quality (which includes optical precision) is also the biggest influence over the intensity of sparkle and the volume of light return that you will see with your eyes.
It's no secret. Brian Gavin is my go-to-guy in the diamond industry. He's a fifth generation diamond cutter who produced H&A diamonds for our private label collection. We chose a Black by Brian Gavin diamond for my son's engagement ring (pictured to the left). That pretty much says it all, doesn't it? You know that my trade status enables me to buy direct from practically any diamond cutter in the world, right? The fact that we chose Brian Gavin speaks volumes.
James Allen is one of the most popular places to buy a diamond e-ring online. They provide one of the largest virtual inventory lists for you to choose from. James Allen also provides state-of-the-art 3D imaging that enables you to view the diamond from all angles which will make it easier for you to make an informed decision.
In the world of online diamonds, Blue Nile is the 800 Pound Gorilla in the room. They offer one of the largest (if not the largest) virtual inventories of GIA Excellent cut diamonds at competitive prices. Blue Nile also offers a huge selection of engagement rings and one of the longest inspection and return periods.