Diamond Prices

For all diamonds, there are a few basic universal rules.  First of all, diamonds are all priced per carat.  So, lets say a 0.50 carat diamond has a price of $1400 per carat (that would be around a G/H SI1/SI2 at wholesale).  So that diamond’s price for the stone would be $1400 * 0.50, or $700. Secondly, diamond prices per carat increase as you jump up to higher weight categories.  Therefore, diamond prices increase exponentially with weight, since their prices increase both due to the increased weight and due to the higher price per carat for the increased weight category.  I stress categories, because you might mistakenly believe that prices per carat increase smoothly as weight is increased, but this is not the case.  Since diamonds are a retail product driven more by emotion than reason, a 0.99ct diamond is worth only about 1% more than a similar diamond weighing 0.98ct.  But a 1.00ct diamond is worth about 20% more than a similar 0.99ct diamond.  Why is that?  Maybe because now you can say it’s a “one carat diamond,” or maybe because now it’s three full digits.  Who knows.  But with diamonds, it’s all about feelings.  This little quirk about the business is the sole reason there are so many poorly cut diamonds out there.  You could imagine very easily that if there’s a 20% price jump from a 0.99ct diamond to a 1.00ct diamond, the cutter who looses that 0.01ct trying to make a prettier stone will lose his job.  Perhaps with the nicer cut it will only be worth 15% less instead of 20%, but either way, it’s a big loss.

This kind of price manipulation by maintaining weight categories has been taken to an extreme by many of the world’s largest diamond companies.  They will take rough diamonds with diameters that really should have only been used to make a 0.75ct-0.85ct diamond (with the proper cut to maximize brilliance), but instead will keep them over 0.96ct to sell them as 1ct diamonds to the major jewelry chains like Kay or Zales.  Even though they will have to sell these diamonds at steep discounts compared to well cut 1ct diamonds, they are still sold at a significant premium to well made 3/4ct diamonds.

See the charts below for a graphical representation of this price jumping phenomenon.