This week I received an interesting question that I thought I would share. It just so happens that the topic is on the Rapaport price list which I had just written a tutorial about. You can read my article here.
The question was what premium on top of Rap would be added to borderline diamonds that are toward the higher end of a grading scale. The reader also wanted to understand how a dealer sets a price on Rapnet or Polygon.
Now if you do enough research, it is only a matter of time before you realise that diamond dealers in the trade have an exclusive platform where they sell diamonds to each other at lower prices than you would expect to find at your typical online vendor. These platforms are meant to be B2B platforms and the first thing to know about these is that they facilitate business and help develop business relationships. The same diamond will change hands at different prices for different people. This means that when a retailer tells you that they will simply charge you an agreed premium over Rapnet or Polygon prices that you aren’t necessarily going to get a great deal.
When you take into account business variables, trying to understand how a dealer sets a price on these platforms becomes meaningless and several trade experts expressed opinions along similar lines in the thread. Also, price depends on supply and demand. As an example, a vendor may not lower a price on a diamond despite not having the demand because he is unable to replace a diamond that he sells if the supply is tight. Some people point out the gross excess in supply in the polished market, but remember that this isn’t the source retailers are looking to at when they need to replenish their supplies.
In my opinion, a full understanding of diamond value and pricing requires a combination of appreciating one’s preferences and then maximising value by tailoring your bang for your buck by optimising for those preferences. Then once you have a selection of diamonds that meet these criteria, you can then use sources like the Rap Sheet and the other methods I identified to help you find the best value by comparing against comparable diamonds. I have also tried to help you try to understand how to identify what is a comparable diamond and this depends not only on the specifications of the diamond but also depends on who is selling that diamond.
What I actually find most interesting about this thread is that it sparks questions about whether it is even possible to formulate rules of thumb to explain the price differences of some common differences between diamonds. For example, what is the price difference between high, medium, and low color within a color grade, or the premium for an eye-clean SI1? What is the premium for a slightly larger carat within a broader carat range? What is the price difference between varying degrees of fluorescence? How much more should you pay for a better cut? And what should be the premium of a lab report from a lab that is more highly regarded and grade tighter?
In my opinion, the significance of these factors to cost ought to be ranked in the following order:
• Lab Report
• Fluorescence
• Cut
• Carat
• Clarity
• Color
Lab Report
The certification cost only becomes more significant with less expensive diamonds. However, in general the better diamonds go to the better labs. For example, some cutters only send their better-cut stones to AGS because AGS are stricter in terms of cut grading. We all know by now that GIA and AGS will have a premium over EGL because of differences in standards.
Does the paper itself add any significant premium or is it the underlying differences in the diamonds? The premium may overlap significantly with the other factors here but I would expect between 30 – 40% difference in costs for similarly graded diamonds from AGS/GIA and EGL.
Fluorescence
Fluorescence can be a discount or a premium depending on the color grade. The amount of discount/premium also depends on other factors such as the clarity grade. For the near-colorless VS range, expect around 15 – 20% discount for strong/very strong, 10 – 15% discount for medium, and around 5 – 10% discount for faint. As a disclaimer, this is only a statement of my own expectations and is by no means official data.
A highly discounted very strong blue or strong blue fluorescent diamond is a warning sign that a diamond may exhibit negative effects such as being oily/milky/hazy. These diamonds would be heavily discounted up to 40%.
Cut
In terms of cut, a super-ideal H&A will cost the same price as a larger diamond that can be re-cut plus the cost of the re-cutting and the risk premium on the re-cutting process. If you asked me how much of a premium I would pay for a super-ideal H&A with no painting or digging and ideal weight ratio? It would probably be around 20%.
I would add 5% premium to a diamond that had excellent proportions on the cutter’s line (i.e. 34.5/40.8). I would discount 5% for a diamond that is outside of the Tolkowsky range of proportions.
You also need to account for slight painting and typical weight ratios that you see in most available H&A, the premium is more like 10 – 15% over a typical GIA excellent. The rest is probably paying for branding and marketing. You’re looking at around the same difference between very good and excellent cut as well.
Carat
The price per carat differences within a broader carat range and the magic numbers are essentially driven by demand in the same way as the more well-known carat ranges such as the 0 – 0.99, 1.00 – 1.49ct, 1.50 – 1.99ct ranges.
For example, the 0 – 0.99 weight category is sub-divided into the following:
“Fifth carats (.18-.22 carat); quarter carats (.23-.29 carat); third carats (.30-.37 carat); three eighths carats (.38-.45 carat); light half carats (.46-.49 carats); half carats-five eighth carats (.50-.69); three quarter carats (.70-.89 carat); light carats (.90-.99 carats).” (From IDEX)
The following table summarises my own expectations for the premium in price per carat associated with these magic numbers.
| Carat Range | PPC Premium |
| (.23-.29 carat) – (.30-.37 carat) | 20% |
| (.30-.37 carat) – (.38-.45 carat) | 20% |
| (.38-.45 carat) – (.46-.49 carats) | 10% |
| (.46-.49 carats) – (.50-.69) | 20% |
| (.50-.69) – (.70-.89 carat) | 30% |
| (.70-.89 carat) – (.90-.99 carats) | 30% |
I would also discount a diamond according to its weight ratio so that any hidden weight is accounted for in the price of the diamond.
Clarity
It’s difficult to say how much premium a VVS2 with two pinpoints has over one with several. It’s even harder to say how much premium a VS1 with a single small crystal in an innocuous location has over one with several feathers. What I think is more interesting is to consider what eye-cleanliness is worth.
Now eye-cleanliness is a subjective matter so it is difficult to place a value on it. It certainly will not come close to the difference between a SI1 and a VS2 (around 10 – 15%). The problem is that an SI1 diamond that is not eye-clean to most people will be much harder to sell than one that is eye-clean. I personally would pay up to 5% more for a diamond that is guaranteed eye-clean to me. In general, I wouldn’t expect clarity features within a grade to affect over 5% of the price.
The exception is when the diamond is eye-clean, yet it is an SI1 or SI2 that exhibits cloudiness such that it makes the entire diamond look dull. This kind of cloudiness is usually accompanied by a comment stating that the clarity grade is due to clouds that are not shown on the clarity plot. A cloudy diamond may be heavily discounted up to 40%.
Color
Color is difficult to assess because it takes time, experience, and a controlled environment. However, James Allen’s website gives us an interesting experience because we can actually compare to a degree the color differences between the diamonds of the same grade under magnification under and against a light background.
Here are 4 H color IF clarity diamonds.
To me, the diamond on the top left has the least amount of yellow tint, followed by the bottom left, and then the bottom right, and the top right has the most tint. However, there was nothing in the pricing that I could affirm to reflect the color difference.
There’s also the matter of the body undertone color of the diamond. Any color other than yellow will be sold at a up to 20% discount.
Conclusion
The takeaway from this discussion is that a diamond is worth whatever someone is willing to pay for it. I can only tell you what I personally would pay for a particular characteristic but my opinions are influenced by my own observations about the marketplace coupled with my own expectations and preferences.
I have tried to identify some of the more common differences between comparable diamonds and shed some light about what I think their premiums are worth. I cannot stress enough that what I’ve mentioned here may not necessarily reflect reality and that true diamond pricing is constantly in fluctuation with so many variables that you simply cannot be so precise.
Remember that the premiums and discounts I mention are not in reference to the Rapaport, they are meant for you to be able to better compare diamonds that you actually have the price for against each other. So please don’t quote me to haggle with vendors but use what I say to figure out which diamond in your selection represents the best value for money.