Diamond prices can be an intimidating thing. While recently shopping around for an engagement ring for my girlfriend, I came across many factors which affect diamond prices. Because of the confusion around why some seemingly similar diamonds are priced significantly differently, I’ve dedicated time to researching the different factors which affect diamond pricing.
What factors affect the diamond prices?
When considering how much to spend on an engagement ring, it is important to understand what affects diamond prices. By understanding the basics of diamond pricing, you can visit the jeweller empowered with knowledge as opposed to relying on a sales pitch to make your decision.
The shape a diamond is cut into effects it’s value. A round cut diamond (also known as a brilliant cut) is the most popular shape (over 75% of all jewellery diamonds sold are round cut). Unfortunately it is also the most expensive. This is due to the additional skill and time it takes to produce this cut. Additionally, more of the rough diamond is wasted in the cutting process than with other shapes. Princess cut diamonds are the next most popular shape and are cheaper per carat due to less waste. This price difference can be substantial – online diamond retailer Blue Nile can charge in excess of 30% extra for round cut diamonds as opposed to comparable princess cuts.
The cut of a diamond refers not to the shape of the diamond, but how well it has been shaped. Cut is commonly considered to be the most important factor in selecting a diamond. As each diamond is unique, there is no uniform standard angles to best cut a diamond at. Cut can be graded as Ideal, Very Good, Good, Fair or Poor.
An ideally cut diamond will allow light to enter from the top, reflect off the facets and back out the top. A poorly cut or asymmetrical diamond will reflect some of this light out of the bottom of the diamond – causing the loss of ‘sparkle’. While diamond prices drop significantly with poorly cut stones, it is not recommended you cut costs in this area.
Color is considered the second most important factor when selecting a diamond. Diamonds come in a range of colors, however most people choose ‘white’ diamonds for engagement rings. The best diamonds will have will have no color, while lower quality diamonds take on a yellow hue. Diamond color is classified alphabetically on a scale of D to Z. Diamonds in the grade of D-F are classified as colourless and are likely to be indistinguishable to all but experts. F color diamond prices can be up to 15% lower than D color, without appearing significantly different to the untrained eye.
Clarity is a measure of the imperfections within the diamond. Most imperfections are microscopic and require magnification to notice. Many experts agree that clarity has the least impact on a diamonds looks. For this reason, diamond prices are less affected by clarity. Clarity is graded on a scale as follows:
- FL, IF – Flawless - No imperfections
- VVSI1, VVSI2 – Very very slightly included - Very difficult to see inclusions under 10x magnification
- VSI1, VSI2 – Very Slightly included - Imperfections not typically visible to the naked eye
- SI1, SI2 – Slightly Included - Imperfections are visible under 10x magnification and possibly the naked eye
- I1 > I3 – Included - Imperfections visible to the naked eye
SI1 and SI2 diamonds are generally considered to be good value purchases. Above this level, it is highly unlikely that you will be able to spot imperfections without the aid of magnification. Imperfections not visible to the unaided eye generally do not affect the beauty of a diamond.
Carat is a measure of the diamonds weight. By itself, this is not a good indication of the size of the diamond. This is because diamonds used for jewellery are usually viewed from the top down. The distance across the top of the diamond should therefore also be considered. Diamond prices are affected by this ‘top size’ as well as the carat weight. Diamond prices also jump significantly as the weight reaches half-carat intervals. It is significantly more expensive to purchase a 1 carat stone than a 0.9 carat one, however the cost difference between a 1 carat and 1.1 carat stone is less severe. This is due to the prestige with having a ‘whole carat’. To receive the best value it is wise to purchase diamonds slightly below these half-carat increments.
Diamond prices for comparable stones can still vary wildly in price based on where you purchase them. In my city I found upmarket chain stores selling loose stones for nearly 50% more than a boutique jeweller. This is due to the extra costs of marketing and store upkeep that the chain stores incur. Additionally, some uneducated buyers may assume that higher diamond prices mean better quality diamonds – something which isn’t necessarily the case!
So how do I get the best diamond prices?
Size isn’t everything. From discussing the matter with a number of female friends, they have all agreed that they would rather receive a good quality diamond than a large one. As the cut of a diamond most affects it’s sparkle, spending the extra money on an ideally cut diamond is a wise idea. Choosing a F or even G colored diamond will significantly reduce the cost without being noticeably different to anyone but an expert. The same can be said for choosing a S1 or higher clarity diamond. Finally, keeping below the half carat increments avoids major price jumps.
I would recommend visiting a range of jewellers in your area and asking to see a range of different diamonds. By comparing the difference each factor makes, you can better understand which areas your money is best spent in. A quality jeweller should be willing to spend the time explaining each area in more detail. Two jewellers I spoke with even offered to specially order in a range of stones with no obligation to better illustrate each of ‘the four Cs’. Visiting multiple jewellers will also help you gauge diamond prices in your area.
I would also recommend using a website such as Blue Nile to determine the ‘base cost’ of a diamond with certain statistics. While no two diamonds will ever be identical, comparing diamond prices to this benchmark provides a starting point to determining if you are being offered a fair deal. Don’t be afraid to honestly tell the jeweller your budget or ask if something seems too expensive. Don’t forget – your budget dictates what you purchase, not what the jeweller says your budget should be.