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How to calculate the value of a diamond?

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Published: 2010-02-16

The value of diamonds is something that can be predicted fairly easy, but you have to be aware that prices usually follow trends. Therefore, one should consult the so-called Rapaport list that is used by all experts to get a first idea of industry prices. In addition to this, diamond cutters calculate the price of their pieces not only on the basis of the price of rough diamonds, but also in accordance with many variables such as overhead as well as other expenses. Most diamond cutters then put together their own price list.

Diamond
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Step by step:

  1. The prices that diamond cutters put into their price list can differ from prices that wholesalers charge. You should always remember that there are no fixed prices for diamonds of any quality, clarity or cut as there is always some competition in the market.
  2. Any diamond´s value should be estimated by somebody who works with diamonds on a regular basis. It is very hard for non-experts to understand the pricing structure. In general, you need to determine three things to calculate the value: the weight of the diamond, its quality (determined by clarity, cut and color) and the price according to the Rapaport list.
  3. To truly understand the system of the Rapaport list, you need to consult an expert. If for example a ten percent increase in diamond prices is announced by a large trader, this does not translate into a general increase for diamonds of all sizes and qualities. The increase for diamonds of a better quality might be higher than the increase for other ones, the number is only an average.
  4. Usually, the list shows humps for the prices of diamonds at a certain level. The demand for diamonds of a certain weight, e.g. one or two carats, is higher than demand for sizes in between. Therefore, these prices usually are comparatively high.
  5. By cutting a diamond, it will diminish by roughly half of its weight. There are some modern cuts, however, that save some more weight of the rough crystal, yet the price for a manufactured diamond is at least double as high as for the crystal itself, not considering the work that has gone into the cutting of the diamond.

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