How Is the Price of Diamonds Determined?

If it were any other product, determining the cost will have been easy. More often than not, product pricing is done by determining how much was spent to produce the item and how much will go to marketing efforts, adding both costs, and then marking up the sum by 15-30% or more. The equation is pretty simple. However, if you were pricing something as precious as diamonds, then it’s a whole different story. That’s because there are various factors up for consideration when determining the price of diamonds.

So how do you go about pricing diamonds? There are three determining factors to help diamond dealers or sellers come up with a viable price for it. Primarily, it must be determined:

  • How much the rough diamond costs
  • How much it cost to cut the diamond
  • What other costs went into the process of turning the rough diamond into one that’s actually marketable

Once these three have been determined, a diamond dealer or seller will need to call in a certified gemologist to ascertain the four Cs of the diamond – the carat weight, color, cut, and clarity – as these are crucial to establishing the importance of the diamond.

Keep in mind that every time the diamond changes hands, it becomes more expensive, too. Its price will be different from when it leaves the mine as a rough diamond up to the time when it reaches the primary market. Nevertheless, there will not be a set price yet. The price will only be set once a diamond dealer or wholesaler purchases the diamond from the primary market and sells it to retailers. At this point, the price of the diamond will have raised much because its value has been determined.

What if you want to sell a diamond you’ve had for quite some time? For instance, you’ve just been through a rough divorce and you no longer want to hold on to the diamond jewelry (engagement and wedding rings) you’ve acquired through the marriage. Can you sell the jewelry for any price you want to get from it? Not quite.

Yes, it’s possible to sell your diamonds a but you need to know how much you can sell it for first. There are online calculators to help you determine the price, but you will need a grading report or certificate to accurately set a price for the diamond.

If you’re wary of using an online calculator, have the jewelry appraised by a trusted jeweler. Better yet, try to get a diamond certificate from an established gemologist like the Gemological Institute of America (GIA). Having the certificate will help you negotiate a better price for your diamond since the certificate gives proof of the authenticity of your diamond.

Once you have the certificate, you can use the information you’ll glean from it to set a price for the diamonds based on the pricing guides used by the diamond cutting industry. That price you’ll get through the help of the certificate will be the most accurate selling price you can get for your diamond.