When you are buying a diamond it is important to understand how the diamond price is calculated. While we can’t set the budget for your purchase, we can outline the most important criteria that affect diamond prices. In this guide you will learn they how prices are calculated , what influences the prices and the price evolution of the most valuable types of diamonds.
This guide will take 15 minutes to read. By the end you will have all the knowledge you need to understand what determines the price of a diamond and how you can use the information to save up to 50% on your budget.
If you are in a hurry you can skip down to the end of the page to read our recommendations and find our top tips to save on diamond prices.
While many factors will influence the final retail price of a diamond there are a few important criteria to keep in mind:
The price per carat increases as the carat weight goes up. This is because larger diamonds are less common than smaller ones. The increase is exponentially as the higher in carat size we go the more rare the diamond becomes.
If you are buying in any other currency take into account the relative strength of the dollar.
More or less, the chart sets the standard in the industry and is used by merchants to determine the price of all diamonds.
While the carat is obviously the number one consideration as you’ve seen already, other characteristics may be determining for the price as well. Loose diamonds are all unique. There are dozens of permutations out there and each one has at least some impact on pricing.
If you’re considering the purchase of a loose diamond and you’re wondering about the factors that may potentially have an impact on the sum you’ll have to pay, keep the following in mind:
Cut: this is the second of the four Cs – the criteria used to determine the quality of diamonds. As such, the cut will have an impact on the price of the stone. The cut is determining for the manner in which a diamond will reflect light and thus – for its brilliance. A well-cut diamond tends to be much more desirable than a stone that isn’t characterised by a lot of sparkle. Diamonds come with a cut grade in the range from poor to excellent according to GIA. Diamonds that are classified either as very good or excellent in terms of cut will be much more expensive than poor diamonds.
Clarity: the third C also has an impact on the price of loose diamonds. Cloudiness, spots and cracks are all imperfections that interfere with the clarity of a diamond. As such, they can easily bring the price of the stone down. Imperfections are usually examined during an inspection that’s carried out prior to buying the stone. If any defects are noticed, these could easily become grounds for demanding a price reduction.
Shape: there are many diamond shapes out there to choose among – oval, princess, round, cushion and emerald are just a few of the options. Just like the other characteristics already mentioned, the shape can contribute to the brilliance of the stone and impact its price. Round diamonds tend to be the most popular variety with round one carat diamonds making the bulk of purchases. The high demand has contributed to a higher price for round diamonds. In addition, a lot of raw material is removed to give the diamond such a shape, which means that the process is highly wasteful in comparison to how other shapes come into existence.
Colour: this is a metric used to determine the whiteness and transparency of a diamond. There will once again be a grade assigned to each stone and this grade will have an impact on its valuation. A colourless diamond is usually assigned a grade D by GIA and it tends to be the most expensive one. A nearly colourless diamond will have a grade in the range from G to J and it will be the second most expensive option. Diamonds that have a light yellow tint receive a grade in the range from N to R and yellow diamonds are the least expensive ones that get assigned a grade from S to Z.
Certification: some authorities refer to certification as the final C because it affects diamond desirability just like the other quality criteria. Having a diamond that’s certified by one of the internationally-recognised organisations will result in a higher price, regardless of the carats and the other characteristics. GIA ,IGI and HRD certified diamonds tend to be among the most expensive varieties out there.
Where to buy: Jeweler or retail markup has the biggest effect on diamond pricing. The exact same diamond can have up to 100% markup when you buy from a jeweller or set in a ring. Avoid thiese high markups by buying the loose diamond seperately
As we already mentionned, there exist a reference price chart for loose diamonds that is being used by professionals. It is called the rapaport price chart
It is updated every friday and represents the current market value of diamonds.
Example of rapaport price list
As you can see it is a grid that shows the price per carat for a given color and clarity of a diamond.
If you take a look at a standard Rapaport chart, you will see that the colour, the clarity and the carat will all be considered. In the chart, you’ll see the price of round, parcel, pear and other diamonds. More or less, the chart sets the standard in the industry and is used by merchants to determine the price of all diamonds.
Thus, based on this chart, a 0.86 carat diamond can cost anywhere between 1380 and 6977 dollars per carat.
Next to the rapaport price list there exist other indexes that are used to show the current market value of diamonds. On of those is published by IDEX and is called the Diamond Retail Benchmark. Like the Rap list, the DRB offers a high-level standard price off of which should be applied a “discount” to arrive at the final consumer price.
The list is available here, but without knowing what “discount” should be applied in your specific case, it will be challenging to extract any usable information.
The DRB presents a retail price recommendation for a diamond based on each of the 4Cs – Cut, Carat, Color and Clarity. The benchmark is based on the high-end of retail prices currently in the market place, therefore allowing enough room for all business models. The DRB should be used as background information only. Actual prices are determined by the sellers.
This index is created by a fully transparent methodologyyand allows consumer to look up a reference price for their diamond (source idexonline)
example of drb price list
The list works similar to the rapaport price list and will give for a diamond size range an estimate of the value for a given color and clarity grade. On the chart you can see that for a one carat diamond the price ranges from 1821 ( clarity i3, color n) up to 26390 usd ( clarity IF, color D) , these prices are expressed in USD , per whole carat
The average diamond size being used for diamond engagement or wedding ring is one carat. So how much does a one carat diamond cost?
As we explained earlier many factors will influence the price of diamond. The chart from DRB we have shown earlier shows the price differences for a 1 carat round , excellent cut diamond. As you can see based on the color or clarity there is a wide range in prices.
These prices are based on June 2018 prices.
Historically, the price of diamonds has always changed. From 1960 to 2017, the value of diamonds has grown by 14.47 per cent.
As the demand for luxury goods continues to grow and diamond mining remains a constant, analysts predict that the price of one carat diamonds can be expected to increase by six per cent annually in the period until 2020. Until present, the annual increase has been set at approximately four per cent.
Keep in mind that while the Rapaport price chart does have a serious impact on the valuation of diamonds, market forces are also at play. The stability of the economy can be used as an indicator of fluctuations in the price of a one carat diamond – probably the stone that’s most in demand, thus a benchmark in the field.
This isn’t the case for other gemstones, which is why serious fluctuations occur. It’s possible to find one and the same gem that’s massively overpriced due to the lack of benchmarks. While some merchants can definitely attempt to overprice diamonds, it’s much easier for customers to keep a track of a price level that’s adequate for the respective moment.
The history of diamonds suggests one more thing – the price of more commonly found diamonds is stable. These are the 0.5, the one and the two carat stones. Fluctuations are much more typical with larger diamonds because they’re rare.
This is also the reason why the change in price is smaller for 1 carat diamonds than it is for two, three and even four carat stones. The price of a four carat diamond, for example, has tripled in the short period of time between 2004 and 2008. The cost of a 1 carat diamond has not gone up so steeply during this period.
Here’s one more example that can be used to demonstrate the claims about the evolution of diamond prices: Over the first quarter of 2016, the price of one carat diamonds experienced a zero percent fluctuation. In comparison, diamonds in the two to three carats range became one per cent less expensive and diamonds in the 0 to 0.5 carat range gained two per cent in price. These numbers are a clear illustration of the price stability that the most demanded diamonds experience.
When it comes to buying diamonds, you have two options – loose diamonds or jewellery like diamond rings and earrings. For many people, loose diamonds are the option of preference because of the cost-efficiency that they bring to the table.
The price of loose diamonds tends to be much more stable. Loose diamond prices are calculated without a jeweller or another middle man to affect the process. Thus, the surplus charge isn’t as high. When jewellery is being made, craftsmanship and the cost of precious metals have to be taken in consideration on top of the diamond.
Going back to the earlier example, while a one-carat diamond can cost about 3,000 US dollars, a one carat diamond engagement ring with a band made of 14K gold can start at about 5,000 dollars. Obviously, there are exceptions and it’s difficult to come up with an average, this figure speaks a lot. The more reputable a jewellery maker is, the more you’ll have to spend on a one carat diamond engagement ring. In that instance, you’ll be paying for the craftsmanship and the characteristics that the brand stands for. All of these will be added on top of the base price you’ll have to pay for the one carat diamond.
One more thing to keep in mind is that loose diamonds will often be available at wholesale prices, especially if you’re looking to buy a bigger number. Thus, there could be additional possibilities to bring down the budget.
If you’re looking for the best loose diamond buying opportunity, you may want to consider the following one. By filling out the form, you’ll give us a better idea about the important factors to consider when buying a stone. When you complete the form, you’ll be provided with a custom quote that will correspond to your preferences and give you our best offer .
The good news is that you can access additional resources to learn more about how diamond prices are fluctuating. These resources are particularly beneficial for investors and for people who want to use the diamond purchase to eventually make money in the long run.
The International Diamond Exchange is a pretty useful resource for diamond buyers. For a start, it features a database of over 700,000 diamonds from global diamond centres. In addition, there’s a diamond index and a price calculator that will give you an adequate number for the specific moment. According to IDEX, the price of a one carat round diamond (G, VS2) is set at 7,800 dollars per carat as of mid-May 2017. The price of a similar diamond in the 2 to 2.99 carat range is 15,000 dollars per carat (30,000 dollars for a two-carat diamond).
You can also check out the Rapaport diamond weekly report. This is a market comment that tells diamond investors and buyers about the latest developments that could potentially have an impact on the price of loose diamonds. Some of the information is available for free while other content and reports are considered premium.
Additionally, you can find many other diamond price calculators online. You will be asked to input information about your preferences in terms of shape, clarity and carat. Based on those, you will be given with a price range suggestion. Some of these calculators, however, are branded. As a result, they’ll refer you to the price range of a specific retailer rather than to impartial information.
Based on this information, you probably have already reached the conclusion that diamond valuation isn’t an easy task. Carat measurements matter but so do many other features. Market forces are also at play, especially when it comes to rare diamonds that are in high demand. In contrast, the highly popular one carat diamonds tend to benefit from a much higher price stability.
Whether you’re interested in loose diamonds as an investment or getting stones for the creation of custom jewellery, identifying the right price to quality ratio will be of paramount importance. Obviously, the task isn’t easy to accomplish because of the multiple criteria that may potentially balance out each other or contribute to a sharp increase in the price of the respective stone.
Getting a good deal on loose diamonds is all about being informed. Hopefully, the resources provided in this guide will make it much easier for you to identify stones on the market that are worth buying.