How Not To Get Ripped Off: Diamond Prices Guide

THREE BASIC RULES TO LIVE BY

Buying diamonds can be tricky. Most especially if you have no idea how to do it in the first place. To ensure that you get what you want according to the right and fair value and price, you have to take note of the following process to ensure the diamond prices :

1) Ensure Certification

This is the most important step when it comes to purchasing diamonds; especially when it comes to spending more than $1,000. A certification is a necessary element to check whether you are given what the diamond company claims the diamond to be. Also, make sure that the certificate provided only comes from GIA and AGS which are the best diamond certification, provider. These are laboratories that serve as the gold standards in the diamond industry.

2) Check the Quality

The second thing that, how to judge diamond quality? You must do is to check the qualities listed on the certificate. So to effectively do that, you must first need to understand what they mean. And this begins by observing the four Cs: Color, Clarity, Cut, and Carat.

3) Compare the Pricing

Ultimately, the best indicator that you get your money’s worth without overpaying is through checking the diamond prices list. This entails you to shop and check around shops, both online and physical, for their diamond prices. Of course, it helps to keep in mind that online stores are cheaper compared to physical ones. And to ensure that you are in a legit online shop, make sure to go to industry leaders such as Blue Nile and James Allen. However, even with these slight differences, you must know how to identify the right baseline of the prices.

GOING DEEPER INTO DETAILS

As a newbie to the world of diamonds, there is always a possibility that you will get ripped off and overpay. But that is about to end now. With the following diamond prices guide below, you will learn to identify the appropriate value of diamonds according to their price:

price chart for 1 carat diamonds
A typical price sheet which indicates diamond prices per carat (in hundreds USD).

The first basic and universal diamond rule are that all diamonds are priced per carat. For example, if a diamond is priced $1400 per carat; a .50 carat diamond price would cost $700. The second rule is that diamond prices per carat increases as you jump up to higher weight categories. Ultimately, the diamond prices increase exponentially according to the weight, since their prices increase both due to the increased weight and the higher price per carat for the increased weight category.

Categories

However, it is important to take note how categories are stressed above. It is not all the time that weight affects the prices of the diamonds per carat. Aside from that, emotions can sometimes affect the prices. By this, we mean to say how diamonds are retail products that are purchased more for the emotion or feelings of the consumer than reason. This is the underlying reason why there are so many poorly cut diamonds available out there.

Cutting and Price

These days, diamond companies have become more and more innovative with their business. Some of them would even go to lengths just to gain a higher profit margin. One way they do this is by the cut. They would try to retain weight categories by making the cut mask the true value of the carat. For example, companies would take rough diamonds meant to be used only for a 0.75ct-0.85ct and keep them over 0.96ct to sell them as 1-carat diamond.

DIAMOND PRICES LIST

In the world of the diamond industry, there are two basic categories of pricing diamonds. The first are those that came off from The Rapaport diamond price list and the other one are those that aren’t from it. To know more about this, continue reading below:

The Rapaport Price List

In 1975, Martin Rapaport left his life as a cleaver and rough sorter in Antwerp, Belgium and came to New York as a broker of rough and polished diamonds. Soon after in 1978, he created the Rapaport Prices List, which is now widely used as a baseline for pricing almost all loose diamonds sold as single individual stones. These are generally S13 or better in clarity and K or better in color. The Rapaport Diamond Report price list or the “Rap List” is released weekly on Fridays.

The Rapaport Diamond Prices Chart
The Rapaport Diamond Price Chart

How to Read the Rapaport Price List

To help you with identifying the prices, we have below a guide on how to read the Rapaport Diamond Report.

When you search for the “Rap List”, the first things you will notice are the four separate grids. These grids correspond to a different size category.

Next, you will notice that each grid is a matrix of color against clarity.

After, you will have to find the “Rap Price“. To do this, take note of the three essential pieces of information: size, color, and clarity.

You will know that the number indicates the price since it is always in the hundreds.

Why Companies Lose the Certificates

As you have probably noticed, there are many diamond certificates out there that will tell you the value, worth, price, and other details of the diamond. However, not all companies use the certificates simply because of how it will affect how the diamonds will be sold; most especially if they are lower in quality and grade like the I1. Some companies cunningly choose not to sell GIA certified I1 diamonds because they know that they can sell them at a higher price without the certificate; and therefore, without basing the prices off the Rapaport price list.

Discount and Premium Prices

As you have noticed by now, there are many companies out there that sell their diamonds at a discounted or premium prices compared to the Rap price. They trade at a discount with the Rap Price list. They do this based on the following factors: color, clarity, and weight. Others include: fluorescence, cut, inclusion quality, the luster of the diamond material, and color clarity.

“20 Back” and “20 Below”

The terms “20 Back” and “20 Below” refer to the diamonds that might trade at -20% or even -15% less than the Rap Price. This is usually applied when the diamond is usually cut nicely but has some slight deficiencies as it could be way off on the side of the diamond, it’s H color looked like a G, or there was no fluorescence. So a buyer would only want to buy that diamond for “20 below”. And to calculate this, you just have to reduce the percentage from the Rap Price simply.

Sweet Spots of Value

If you take a look at the Rapaport Price list, you may be able to find some inconsistencies with their pricing. It could be the difference between a 1ct G color VS2 clarity diamond and a 1ct H color VS2 clarity diamond; which could amount to a full $1000. But the difference between the same G VS2 and a 1 ct F VS2 is only $500.

Unfortunately, if you are asking why this is, you might not be given an answer. Usually, emotions are to blame in this case. So if you are looking for someone who can help you navigate through these inconsistencies and find the sweet spots of value, then it is better to consult with a skilled diamond dealer.

COLOR AND CLARITY TO DIAMOND PRICE

When looking at the Rap List, you may find how much weight—in fact, too much—is given to color and clarity when it comes to determining the price. For instance, a G color SI1 clarity diamond with an ideal cut and pleasantly laid out inclusion will be better than a G color VS2 clarity diamond with an average cut. However, you may find that the former might cause less than the other.

If we continue with this case, let us say that for a 1 ct diamond, a G SI1 that was an ideal cut, the price would be approximate “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.

In short, the “25 back” SI1 is a much much prettier diamond than a “35 back” VS2, yet the VS2 is still more expensive.

To help you wrap your head around this, it is crucial that you have someone—preferably an expert—to help you.

Other Diamond Pricing Alternatives to the Rap List

With age come changes. And in terms of the Rapaport Price List, many people feel that there is so much to criticize about it. One, Martin Rapaport’s methodology is unclear. Two, the pricing could be a result of his own biases since he is known for having a financial interest in diamonds. As a result, several attempts have been made to create other diamond pricing alternatives to eliminate the conflict of interest that is seen heavily in the Rap List. One of the recent pricing industry standards that have been gaining recognition is from the IDEX company.

IDEX ONLINE

Just like the Rapaport, the IDEX offers an online B2B industry diamond exchange on top of the publishing industry analysis. However, unlike the Rap List, they have a completely transparent methodology when it comes to creating prices. It is called the IDEX Diamond Price Report.

Index Price Report
Index Price Report

For this reason, many major diamond dealers prefer and support their price list than the Rapaport. However, when it comes to the broader market, this has been met with much resistance.

Diamond Retail Benchmark

The Diamond Retail Benchmark is another published price list that is more consumer-focused. They also offer a high-level standard price off of which should be applied a “discount” to arrive at the final consumer price.

Diamonds Priced Without the Rapaport

Not all diamonds are equal. This is why some of them are not included in the Rapaport Price List. The main reason for this is the certification. These diamonds are not usually certified and therefore cannot be sold as single diamonds. Instead, they are sold according to a “Parcel Price“. The parcel price is determined based on the price per carat for the weight of diamonds purchased; not counting the number of diamonds selected.

Rely On Experts

In cases where identifying the diamond prices are a tad too challenging; it is best to rely on experts to give you good advice about these things.

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About 

Kevin Lee is a former tech advisor who cut his teeth in Silicon Valley. He now spends his time sharing his passion for investing in diamonds and jewelry. You can reach Kevin for any comments by using this form.