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.