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How diamonds are priced

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There are a number of factors which influence how valuable a diamond is, but principally these are the carat weight, colour, clarity and cut (known as the four Cs). But some factors affect the stone’s price more than others, and it’s not always the case that the diamond’s visual appeal changes in proportion to its price. In other words, some diamonds offer a bigger ‘bang for your buck’, so it’s worth taking the time to understand how diamonds are priced to make sure you get the best possible deal.

How to choose a diamond
Cost per carat

The first thing to be aware of is that diamonds are priced per carat. For example, a 0.5ct diamond might have a carat price of £2000. This means that the price of the stone is 0.5 x £2000 = £1000. Larger diamonds tend to have a higher carat price than smaller stones, meaning that prices don’t go up in a linear way with size. If you double the size of a stone, the price will be more than double.

Carat prices also tend to step upwards at round numbers. For example, the carat price of a 1ct diamond will be different from that of a 0.99ct diamond. Even though the weight difference between the two stones is only 1%, it’s quite possible that the price difference might be 10-20%. If you can find a diamond you like at just below a price threshold, it’s likely to represent good value.

The Rapaport Diamond Report

Diamond Rap List
Diamond Rap List

The second thing to understand is the system by which loose diamonds are priced within the industry. The Rapaport Diamond Report (or Rap List) is a price list released every Friday, describing the carat price for each category of loose diamond. So for example, a 0.5ct diamond of a certain colour grade and clarity grade might have Rap List price of US$3000 per carat, meaning that you would expect the 0.5ct stone to be priced at 0.5 x US$3000 = US$1500.

Discounts off Rap

A key point to understand is that the Rap List merely indicates what the going price is for certain types of diamond. It’s a free market, and nobody is compelled to buy or sell at the prices listed.

A second key point is that the Rap List takes account only of colour, clarity and size, and is therefore a blunt instrument. It doesn’t factor in a diamond’s cut, polish, or symmetry - or whether it suffers from fluorescence.

Taken together, these two points mean that particular stones often trade below the listed Rapaport Price. If a stone is traded at 20% below the listed price, this is referred to as ‘Twenty Below’ or ‘Twenty Back’. If two diamonds fall into the same category on the Rap List (same carat weight, same colour, same clarity) but one is trading at a discount relative to the other, it’s probably because one has better cut, polish and symmetry or because the other has significant fluorescence.

It’s worth noting that while cut, polish and symmetry have a major impact on a diamond’s appearance, they don’t tend to affect price as much as colour and clarity do. If a stone has premium colour and clarity grades but is poorly cut, it is unlikely to offer good value in spite of the fact that it will likely be heavily discounted against the Rap Price.

It’s also worth being wary of diamonds graded SI1 or SI2 for clarity that are heavily discounted. These grades are associated with stones that are borderline clean to the naked eye. A really good SI1 is likely to look very clean once it’s been set, and its price will probably reflect this. However, a heavily discounted SI1/SI2 diamond was probably lucky to get that grade, and may well suffer from very obvious inclusions.

David Rhode
Together with Tim Ingle, David created Ingle & Rhode to offer a better alternative to the traditional luxury brands. Since 2007, we’ve provided our customers with genuinely ethical engagement rings, wedding rings and fine jewellery – free from conflict diamonds, dirty gold and child labour. With more than 16 years experience in the jewellery industry, David has deep expertise in diamonds, gemstones and jewellery design and manufacturing.