Costs of Gems

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Cost of gems

It’s amazing that the cost of gems isn’t listed as one of the basic 4 C’s since it is the one thing that absolutely EVERY customer asks about and it even happens to start with ‘C’. Here is a brief primer on how gemstones are priced:

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Excluding small side stones, diamonds and gems are generally sold separately from the mounting. This suits both the customers and the dealers. For the customers, this makes it possible to examine the stone without anything being obscured by prongs and without the distractions supplied by the ring. For the dealer this allows them to sell the customer exactly what they want while maintaining a reasonable inventory. The more unusual and the more expensive the stone(s), the more likely this is to happen.

Diamonds are usually sold by weight. When the dealers buy them, they are ALWAYS sold by weight and you can bet that the price you are being charged more or less is based on the price that they paid. 1.75ct. stone will be described as $7,500/carat (if this didn’t make sense to you, it’s because you started the intro to diamond grading with the Cost button. Feel free to read further or go back and read up on weight, clarity, color, and cut). The final price for this stone will be $7,500 x 1.75 = $13,125.00.

Basically, the cost of gems per carat will go up as each of the important characteristics gets better, and go down as they get lower. Often these changes are quite dramatic. All other things being equal, a 2 carat stone will be about 4 times the price of a 1 carat stone with the same clarity, color, and cut. This is why stores like to advertise ‘total weight’ of their merchandise.

Many dealers start their pricing procedures using a document called the Rapaport report or one of the several competitive documents in the industry. This is a pricing sheet that relates weight, clarity, and color to produce a price. Unfortunately, the Rapaport diamond report (or Rap for short) isn’t nearly as useful as many people wish it was because it glosses over cut as well as availability issues. Rap prices can vary from reality by as much as double (or half) of the appropriate price. Buying strictly off of Rap is kind of like using the Kelly blue book value for a car without paying attention to the condition of the vehicle.

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