# Diamond pricing and factors that affect it

## Sree Iyer

In our previous post, we talked briefly about the 4 Cs – Color, Cut, Clarity and Carat. While the price of a diamond is based on its weight (i. e. carat), there are subtle nuances to keep in mind. For instance, two 1 carat diamonds combined are worth less than a 2 carat diamond, all else being the same. Why, you ask? It has to do more with emotion and the feeling that a 2 carat diamond is rarer than a 1 carat diamond and therefore should be more expensive. If William Shakespeare were to be alive today, he would have said, “A diamond by any other name would be just as pricey!” Okay, poor joke but you get the idea…

#### How Cut affects the price

If you have played cricket, you will know that a 100 is considered more valuable than a 99. Likewise in diamonds, a 0.99 carat (ct) diamond is worth almost 20% less than a 1ct diamond! I guess this sounds just like in cricket where you say, “Oh! He got a hundred!” as opposed to “He made 99”, even if that 99 was for a winning cause. Cutters will routinely try and shape rough diamonds meant for 0.75-0.8ct (this would result in the maximum brilliance) to over 0.96ct so it can be sold as a 1ct diamond. A chart of the relationship between price (in \$) and weight (in ct) is shown for your reference.

If you are wondering why there are steep hikes at 0.3ct, 0.7ct and so on, you got me. I have no idea why it is except to hazard a guess that perhaps these are the sizes used in most rings etc. Like Gas prices in US being high during peak driving season, the Diamond industry maximizes its profit in every which way it can.

#### How Color and Clarity affects the price

Diamonds are priced in two ways – one that follows the Rapaport price chart and the other that does not. The Rapaport price chart (see picture) is published weekly and lists prices as a table. There are four quadrants comprising of four different sizes of diamonds – 0.9 – 0.99ct, 1 – 1.49ct, 1.5 – 1.99ct and 2 – 2.99ct. The columns are clarity and the rows are color gradation from D to M (D being the most expensive). The numbers themselves are in hundreds of dollars per carat. For instance, a 0.95ct diamond of color type E, clarity VVS1 will cost \$9900 * 0.95 = \$9405 per carat. In the latest Rapaport report, an 80.73ct K, VS2 diamond sold for \$4 million, or \$47,132 per carat.

There are rumors doing the rounds that some of the diamonds with a clarity of I1 are being passed off as SI1 without the accompanying certificate. Insist on seeing the diamond certificate at the time of purchase. You are putting down thousands of dollars and should be comfortable that you are paying the right price. There are other pricing charts such as the one from International Diamond Exchange (IDEX) and you can look up the latest price of diamonds here to get an idea before you set out to purchase one.

#### Current Market situation

Diamonds are oversupplied in the market today and this presents an excellent opportunity for buying. With Gold price too running low, it is one of the best times to be buying diamond jewelry. In the next article, we will see how a diamond jewelry, be it a ring or a necklace gets priced.