Understanding Diamond Prices

Understanding Diamond Prices Related Information:

Diamonds are very beautiful and popular precious gems, and many people buy diamonds in various types of jewellery each year to give as gifts. However, many people are unaware of just how diamonds are priced, and what sort of diamonds demand a higher price. Understanding the pricing structure of diamonds is important if you are looking to buy a diamond, and the amount you have to pay will depend upon what you are looking for in the gem.

Firstly, it is important to remember that the price of a diamond will have increased hugely by the time it gets to the retailer. A lot of work goes in to creating a finely polished diamond from the rough glass-like products that it starts out as. All of the costs involved in creating the diamond have to be added to the price. On top of this, there are profits to be added such as the retailer’s profit.

The value of a diamond is determined by the four Cs – clarity, cut, colour and carat. It is the combination of the four Cs that determines the value and cost of the gem. The fair market value of a diamond is first determined by an independent valuation, and this is based on the combined quality of the colour, carat, clarity and cut. The diamond sight-holder – the company or individual that purchases the rough cut diamond – then has to add other costs to the market price. These costs include the cutting costs, carrying costs, and the profits.

The diamond then goes through a dealer, and it could go through a number of dealers before it hits the shelves in the retail market. Profits are added on to the diamond with each dealer, and when it finally reaches the retail market the shop will also add their profit to the cost, so by the time you get to the diamond in the shops the price could be way above the actual market value.

However, although profits may have been added to the cost of the diamond by the various dealers and the retailer, the basic principle still applies: it is the four Cs that determine how much you will actually pay for the gem. All four of the Cs hold equal importance in the valuation and pricing of a diamond, so any one of these factors could affect the price.

Before you purchase a diamond, you should think about the characteristics that you are looking for: for example, are you looking for something that is totally colourless but you are prepared to compromise on the cut or clarity? Do you want the perfect cut, but don’t mind a slight grade difference in colour? Basically, the more flawless all four of the four C characteristic are in the gem, the more rare and expensive it is going to be.

Round shaped diamonds usually have the most flawless characteristics when it comes to the four Cs, so you will often find that the cost of buying a perfect round diamond is far more than that of buying a non-round shape, even though the difference – except in shape – may not be obvious to the naked, untrained eye. In many cases, such as with colour, it is very difficult if not impossible to tell the difference in slight variation with the naked untrained eye, yet this slight variation can make a big difference to the actual price of the gem.