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How Diamonds are priced

Diamond RingThis is a commonly asked question and has a multifaceted answer. Polished diamond pricing stems from how diamonds are priced in the rough and works on the supply and demand principle. The rarer the diamond, the higher the price.

Have you heard of the four C’s. These four factors are integral in determining the price of a diamond. Cut, Colour, Clarity and Carat.

Cut affects the price in several ways. Round diamonds are more expensive than fancy shapes, Marquise being the most expensive of these shapes, and the square shapes generally being the cheapest. There is a trade-off here though, as square shapes generally appear smaller than their round counterparts of equivalent size.

In all shapes, round included, well made diamonds trade at a higher price than poorly made ones. I believe cut to be the most important factor to consider when purchasing a diamond. Cut grade in diamonds refers to how the diamond is polished, this is divided into three categories, proportion, symmetry and polish.

Proportion is the most important of these three factors. The “props” of the diamond refer to the angles and measurements of the polished stone. In round diamonds it is relatively easy to determine whether the stone is well made or not as the guidelines are clear and well established. Generally proportion is graded into the following categories EXCELLENT,VERY GOOD, GOOD, FAIR and POOR/UNUSUAL (I always chuckle at this unusual as an understatement). Stones which have a cut grade below VERY GOOD are awful in my opinion and will always trade at substantial discounts. Symmetry and Polish are graded with similar categories but don’t affect the beauty or the pricing of the diamond to nearly the same extent.

Colour  influences pricing in a simple manner. Colourless diamonds are more expensive than those with colour. The diamond colour chart starts at D (being colourless) and ends at Z (saturated with colour). Colourless diamonds are extremely rare and are therefore more expensive. The exception to this rule is fancy colour diamonds.

Clarity  is also an easy factor to understand. The cleaner the diamond the more expensive, again naturally because clean diamonds are rarer than included stones. Clarity is graded under a ten power magnification.

Carat refers to the weight of the diamond and affects the price in that the heavier the diamond the more expensive. Large diamonds are rarer than small, therefore more expensive. And naturally if something is charged per weight, if it weighs twice as much, it costs twice as much. Well, Yes, to an extent. Diamonds are divided into weight categories, as the weight goes up, the price per carat increases. So a diamond weighing one carat doesn’t cost twice as much as one weighing a half carat. In fact a diamond with the same characteristics in the aforementioned can cost six times as much!

So how is the price calculated on an individual polished stone. Polished prices are calculated using the Rappaport Price List. This is a weekly report issued to all Rappaport members reflecting the average New York asking price for any particular stone. It is divided into weight categories, colours and clarities, and applies to well made stones. Discounts or premiums are applied to this list according supply and demand and the list responds accordingly. So this list really provides a base price for diamantaires to work from.

In the end, there are so many categories and prices in diamonds, that there is certainly a diamond to fit most budgets. Looking at a wide range of diamonds is essential when making  a decision to buy, and you might be amazed at how different, two similarly priced diamonds may appear.