Diamond Cost Calculator: Determining The Value of A Diamond
Jewelry has maintained its value across multiple millennia and one of the most valuable pieces of jewelry is a diamond. Buying a diamond can be a challenge. It may seem like there is nothing that makes sense. The larger a diamond is, the more it should be worth; however, some smaller diamonds are worth more than larger diamonds. Why is this the case? In the end, there are multiple factors that play a role in the final value of a diamond. In order to truly understand what goes into the price of a diamond, there are multiple factors that have to be considered.
The Steps in Buying a Diamond
Before figuring out how much a diamond is worth, it is important to know the various steps in the process of buying a diamond. There are three large steps that people have to follow. These include:
- The Certification Process: This is the most important step. For anyone planning on spending thousands of dollars on a diamond, the diamond should be certified. This report is important because they ensure the buyer is getting what the jeweler says he or she is selling. This is the gold standard in this industry.
- The Quality: The second step is determining the quality of the diamond. This will be discussed in detail below.
- The Pricing: The last step is to price the diamond. While there are multiple factors that will play a role in the pricing of the diamond, it is always a good idea to shop around and see how the industry leaders are pricing their diamonds.
These are the three most important steps when it comes to buying a diamond. Now, it is time to get more in-depth with regard to the quality of the diamond.
The 4 Cs: Four Factors In Determining The Value of A Diamond
The value of a diamond is ultimately graded by something called the four Cs. These are cut, clarity, carat, and color. All of these play a role in the grading of the diamond. These four Cs are defined as follows:
- The cut of the diamond determines how the jewel looks after it has been cut. This refers to the symmetry and proportioning of the diamond itself. This gives the diamond its brilliant sparkle you can see across the room. To achieve this effect, it’s common for a large part of the stone to be cut away from the finished product, making it pricier to achieve this desired effect.
- The clarity of the diamond analyzes its inclusions or imperfections. In general, a diamond with fewer inclusions will be more valuable.
- The carat of the diamond is its weight. As a rule, larger diamonds will be more expensive if everything else is equal.
- The color of the diamond refers to how clear and colorless the stone appears. Diamonds that are colorless are valued higher than those that have a dull yellow tinge. Color is graded based on this range of color. However, bright yellow diamonds and diamonds of color are so rare, they command an exponentially higher price than near colorless diamonds.
While the quality of the diamond itself is one of the most important factors, there are other considerations as well.
The Demand of the Market
In addition to the quality of the market, the demand of the market based on the shape of the diamond will also play a role. This has to do with the demand of the market based on availability.
This is one of the basic rules of economics: supply and demand. If there are fewer diamonds of a given shape or color, they are going to be harder to get. As a result, their prices will start to rise. In contrast, if there is a lot of supply (of a given diamond), they will be easier to purchase. With fewer buyers, the price will drop. It is these basic economic principles that are in play in the diamond industry.
Therefore, diamond prices will rise and fall with the given trends in the jewelry industry. If there is heightened demand for a certain cut or style of diamond due to the current trends, the supply will start to dry up, driving up the price. This demand vs. availability issue will continue to play a role in the price of a diamond moving forward.
A diamond’s shape and the market supply and demand for that particular diamond shape can also influence the price.
An Example of a Diamond Price Calculator
Those who are interested in buying a diamond want to make sure they are getting a good deal. One of the helpful tools is called a diamond price calculator. These calculators are great because they allow the user to play around with some of the variables to see how they impact the price of a diamond. Some of the variables that might include:
- Fluorescence: The fluorescence in a diamond can sometimes be seen as a negative, and other times as a positive. The calculator might include variables ranging from no fluorescence to very strong fluorescence. If it is on the cheaper end of diamonds, it may have fluorescence that is negatively impacting the diamond. Again, not all fluorescence is bad, it depends.
- The Cut Quality: The cut quality is graded anywhere from fair to Excellent, depending on the calculator used. The better the cut (as in the more symmetrical and proportional), the more the diamond will be worth.
- The Gemological Report: Buying a diamond is about risk vs. reward. If there is a report to go along with the diamond, this removes some of the risks. For this assurance, the price of the diamond usually goes up; however, as discussed above, this is an important step that should not be overlooked.
- The Diamond’s Value Trend: The price of a diamond is about supply and diamond. Diamond prices fluctuate over the years as the market’s supply and demand fluctuate back and forth. This trend will play a role in where the price of the diamond is located today.
Using a diamond price calculator is helpful; however, it is important to take a look at the various factors in detail as well.
Calculating Diamond Price Per Carat
When it comes to how much is a diamond worth, it's important to note that they are all priced by carat weight, which is the unit of weight for diamonds. However, a two carat diamond is not worth double the price of a one carat diamond. That’s because a high quality, brilliant cut two carat diamond is rarer than a one carat diamond.
Now, not all diamonds have the same price per carat, as discussed above. Other factors can increase or decrease the price of a diamond. A diamond’s rarity and market supply and demand are other factors.
How big is a 1 carat vs a 2 carat diamond?
This is a common question. Although diamonds are measured by weight, buyers purchase diamonds based on size. In this video, we explain how Vanessa Nicole sources diamonds to achieve the effect of a larger size diamond without having to pay for it in carat weight.
The Value of the Appraisal Process
Appraisals are important when buying a diamond because it is professionally inspected and graded and lets people know what the true value of that jewel is worth. Those who are buying an expensive diamond may want to get an appraisal done so they know they are getting a fair deal; however, appraisals also cost money, so this added cost is something that must be considered. You'll almost always need an appraisal for insurance replacement value.
Different Markets for Diamonds
The price of a diamond might change given the market. Some of the markets include retail markets, online markets, consignment, wholesale markets, and peer to peer markets (such as Craigslist). Some of the important points to keep in mind include:
- Retail: Diamonds tend to be more expensive in retail markets given the overhead of running a shop; however, the added assurance of holding the diamond, asking for a report, and getting an appraisal done reduces the risk to the buyer.
- Online: Online markets tend to have a broader spectrum of cheaper options available; however, people need to make sure the person on the other end is trustworthy. Often the diamonds sold online are ones that didn't sell in a store when seen in person compared to other diamonds. There is some added risk.
- Wholesale: Wholesale distributors cut out the middle man, helping people save money; however, they usually sell diamonds in bulk and the diamonds might not be cut or polished yet.
- Peer to Peer: Peer to peer purchases, such as Craigslist, take on a lot of risks. While the price might be cheaper, people might not know exactly what they are buying. This makes this route very risky.
How To Save Money When Buying a Diamond
When it comes to saving money on a diamond, education and knowledge are power. By understanding how diamond price is calculated, the buyer is empowered to make an educated decision.
Buying a diamond ring from a chain retail jewelry store will command a higher price because the corporation needs to make a high margin to cover the cost of overhead like sales commissions, rent and costly marketing campaigns. It can help to shop these stores to get an idea of style and price range you are looking for. Then once you’ve narrowed down your criteria and your budget, you’re armed with information to price compare.
Choose the Diamond and Get the Best Price
In order to choose a diamond and get the best price, this is an intersection of personal preference and value. The factors above will help people evaluate diamonds to find the best deal. Then, it comes down to making a decision. It can be helpful to turn to an updated diamond price chart that lays all the information out in black and white. Then, this chart can be compared to the diamonds on sale to find the best value. This is how those looking for diamonds can leverage this information to get their money’s worth.