What Determines a Diamond's Price?
When it comes to diamonds, two main questions pop into everyone’s mind first. One: “How many carats?” Two: “How much?” But it usually takes some time to get to one of our favorite questions: “What determines a diamond’s price?”
As diamond experts, we know (and are happy to tell everyone and anyone who listens) that there’s so much more to a diamond’s beauty than just its carat weight. We know that each of the 4 C’s: Cut, Color, Clarity, and – yes – Carat weight all work together to make a diamond stunning.
Because what’s the point of a huge rock with a poor clarity grade? That’s what we lovingly refer to as “frozen spit.” And a beautifully colorless D grade diamond doesn’t do much good if it’s cut so poorly that you can’t even appreciate it. And the same goes for any way you combine the 4 C’s. Just because one is a highly desirable grade, it can’t shine as bright as it should unless all the stars align and the 4 C’s work together. It’s all about synergy where diamonds are concerned.
It’s important to understand what makes a diamond beautiful, because that’s what makes it valuable. A diamond’s price depends on each of the 4 C’s strength individually, but even more so on their combined effort. Because the better each one is, the rarer the overall diamond, the higher the price.
That being said, two main factors influence a diamond’s price. Its carat weight (yes, it’s also the most important of the 4 C’s to diamond dealers focused on price!) and the market value.
Diamond pricing is determined on a per-carat basis. Even diamonds that aren’t a full carat (for example a half carat diamond) fall somewhere on this price scale. If a diamond’s characteristics nab it a $1600-per-carat price tag, that aforementioned .50 carat diamond would cost $800. A .65 carat diamond with exactly the same characteristics would cost $1040. But a diamond over 1 carat, and even in most cases one over .75ct? It’ll cost you. At least 20% more.
Diamond prices rise exponentially, not linearly. A 2 carat D, VVS1 diamond with an excellent cut isn’t simply twice the price of a 1 carat D, VVS1 excellent. Because larger, well-formed diamonds are rarer straight outta the mines, they command a much higher price than their half weight twins.
But who gets to decide these prices?
Rapaport is the trade standard for diamond pricing. There is a weekly diamond price list that helps dealers set their prices and buyers know what a fair price for the diamond is. This index covers various diamond shapes, color, clarity grades, and within the diamond trade, diamonds rarely sell for more or less than 15%-20% of this pricing guide.
It’s absolutely imperative to note that the prices are based on GIA grades for diamonds. GIA is the industry gold standard for diamond grading, and you can’t compare an EGL certified diamond to a GIA certified diamond like you’re comparing apples to apples. It’s more like comparing nectarines to peaches. Or maybe sweet potatoes to yams. Regardless, these for profit labs sell different products. So a GIA certified F color diamond isn’t the same thing as a EGL F color diamond.
And when it comes to diamond certificates, they’re great for online-only diamond shopping. But it’s easy to get caught up in a hunt for the perfect certificate – rather than the perfect diamond. So we recommend that you find a jeweler you trust and rely on your own judgment rather than blindly shopping for certificate alone.
Because, as you can see, what determines a diamond’s price is complicated. And with this large financial investment, we want you to buy a diamond you see and know is beautiful – no matter what kind of premium you’d pay for a diamond that looks good on paper.