How Diamond Prices Are Determined

Pricing regular products is straightforward. Find how much it costs to make the item, how much it costs to market, and then mark it up by 15 – 30% or more. Simple, right? Pricing diamonds isn’t that simple. Many other factors are considered when diamonds are priced.

Diamond prices are determined by first the cost of the rough or raw diamond, then adding the cost of cutting the diamond, plus other costs involved in transforming 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.

Diamonds become more expensive each time they changes hands until they get to the retailer, where the price is raised again. The diamond travels 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 traders and wholesalers, then 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. Some can be found on the Internet, and are used by diamond dealers. Before you can accurately price a diamond, without a Diamond Grade Report, you need to know a lot about diamonds, including the different cuts, clarity, color, and weight – and how each of those aspects adds to or subtracts from the value of a diamond.

It is better off to get a Diamond Grading Report on the diamond, and use that information to look up the price in one of the diamond cutting industry guides. The report and guides will give the most accurate value of diamonds in your possession, or diamonds you are considering buying.