Pricing question...Rapp report in B&M vs online vendor

[Pharmer]

Hello all,

I''m looking for opinions on something I was told today while in a brick and mortar jewelry store. I''ve had my eye on a WF "a cut above" F SI1 with an HCA of 1.2 w/ AGS certification. The price is 7757 with the pricescope discount. I know there is a premium being paid for the "a cut above" brand. I was in the B&M store which my cousin recommended to me ( she got her ring there). He pulled out hte rappaport report and showed on the chart the price for a diamond with my specs being $6300/ carat. The price he said from that rapp report was that I shouldn''t be paying more than $7623 and that he would include a 5% discount because I was a referall which would be $7252. He only deals with GIA stones but he said it would be (not impossible but) difficult for him to get a Sarin report quickly on any stones he calls in so I could run an HCA score. Does this sound right to you all? I was under the impression the stone from WF was a pretty good price. Any input would be grand! I''m starting to get second thoughts (damn) but I''m not sure if what he says is legit or if he''s just a good salesman.

Thanks
Pete

 

[Brian Knox]

Hi Pete,

Any B&M that is forward thinking and wants you for a customer can compete on price if they choose, especially a B&M that stocks diamonds as they get much better pricing than dealers that memo diamonds (when wholesalers consign diamonds to jewelers).

All talk about B&M's not being able to compete on price is nonsense.

B&M's that stock diamonds can actually sell diamonds for less than the 'brokered list' sellers if they choose and still make money because they already own the goods and are not paying a memo premium.

Admittidly the 'trick' is finding these forward thinking B&M's that want your business.

They are out there, I hear and see many others on this forum besides me.

 

[Todd07]

Referencing RAP is complicated for consumers. Did you read through the tutorial on it?


Rapaport Report™




"The Rapaport Diamond Report™ and The Diamond Price Report™ are trade price market analysis and indicator tools of HIGH CASH ASKING PRICES. Price reports do not factor in higher prices for better proportions and finish or lower prices for poor proportions / cut, etc.

Price lists are designed for diamond industry professionals. Would you expect to be able to use say a doctor or a pharmacist’s professional tools? So remember if you want to use these lists, or do a deal with a jeweler based on the pricing info in them then be prepared to be ripped off."





A great cut justifies a premium over RAP. Personally, I prefered to use the pricing tools here to compare stones from different vendors but with similar specs. You can plug in F/SI1/Tight table & depth ranges/H&A into the home page search engine to find comps from other suppliers. This will help you see whether the premium is for cut or just brand.

 

[denverappraiser]

Pete,

Rap is irrelevant. Even if you agree that it somehow represents a way to calculate the asking rice of a stone, it does nothing to help you compare stones to one another. Brian is right, the jeweler may very well have a comparable stone for a better price than WF. Let them make their case. The real question is deciding if the stones are comparable. The sarin report is important in making this decision. GIA is a good lab and I would not suggest you pay much of a premium for the AGS paper if, indeed, it’s GIA. There is a treatise on this subject on the front page of pricescope.

H&A and A Cut Above branding are items that some people find more valuable than others. You should decide if you value these things to you. Not everyone does but they are very popular. Does the store have a brand that they are calling comparable to ACA? Some brands are much more expensive than others. How does their trade in policy compare? Do you care? Do you need financing and is it offered? Does the dealer actually have the stone being discussed and have you seen it? Will he allow an outside expert to examine it before your final decision?

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[yowahking]

Pete,
All good info so far from others. Another way that "forward thinking" jewelers as Brian calls them, are competing is to take stones from trade in, estates, or just bought from customers who need money. They can be quite a bargain if you are patient in the search. We have had great success recutting them to fantastic looking stones where other jewelers have passed on making offers due to cut. Just took a 1.46 with a severe chip and now is a 1.11 ideal cut. Sold the first day in the case. Sometimes we send them to get a cert, sometimes they are sold with only an appointment to an independent appraiser.

 

[nicknomo]

Well, if the guy is willing to get you a Sarin report, go for it. Personally though, I think you will be hard pressed to find a stone with good numbers at most B&M stores. That's one reason I found it difficult shopping at B&M. Most were so used to dealing with common American cut junk that they looked at me like I was crazy when I asked for an ideal cut or AGS 0 diamond.

Nevertheess, what I've learned is

1) Always speak directly to the JEWELER. Sales people come and go, and many times don't know much about diamonds.

2) If you ask them for something along the lines of an ideal cut, and come back with something not ideal, don't bother being overly patient.

3) If someone comes back with a diamond and calls it ideal, but it is obviously not... Leave.

4) Be adamant about what you want, and make them be honest about whether they can provide it. Several times I was told to come in because they had stones that met my specs, only to find that the diamonds were NOT what I had asked for.

5) Know your stuff. If you don't know what you are talking about, it is very easy for them to lie to your face. In the beginning I had people telling me how a VVS stone would sparkle more than an SI stone, and how severely deep diamonds were "ideal" cut. One of my friends ended up buying a 3 ct round labelled as ideal from such a jeweler. When I put my ideal scope to it, I saw FAR MORE white than pink! I didn't think that was possible .

If you find a good jeweler who won't try to rape you, you should be willing to give them a chance to get your business. Nothing from your experience makes me think you have a bad egg, but that assumption isn't based on much. Really though, if you educate yourself, it won't matter. Judge a diamond based on it's specs and beauty.

BTW, the rap sheet means nothing. Most diamonds are supposed to sell for a % off of the rap sheet. A diamond with AGS 000 proportions or equivalent is the only thing that will sell at the rappaport price. If it's girdle is too thick or small, or if the proportions or symmetry or polish is less than ideal, then the price is discounted. The further away from ideal, the higher you get off of the rap sheet. Some branded H&A cuts even sell higher than rap. Really, for 5% off rap he has to be giving you something ideal or very close to it. If it isn't close to ideal, maybe 10% or more would be appropriate. In most cases, you are better off with the rap sheet out of the way. Just compare prices here on pricesscope instead.

 

[Rhino]

----------------
On 10/13/2004 7:15:17 PM Brian Knox wrote:





Hi Pete,

Any B&M that is forward thinking and wants you for a customer can compete on price if they choose, especially a B&M that stocks diamonds as they get much better pricing than dealers that memo diamonds (when wholesalers consign diamonds to jewelers).

All talk about B&M's not being able to compete on price is nonsense.

B&M's that stock diamonds can actually sell diamonds for less than the 'brokered list' sellers if they choose and still make money because they already own the goods and are not paying a memo premium.

Admittidly the 'trick' is finding these forward thinking B&M's that want your business.

They are out there, I hear and see many others on this forum besides me.



----------------

Good advice John and very true. Many assume that B&M's are going to be so much more when that indeed is not the case. Yes there are aspects about B&M's that add value to the purchase but then there are also B&M's that offer stones without that added value as well who indeed are overpriced. Unfortunately most B&M's fall into that category.

Regarding the locals stone compared to WF. Quite frankly even if the locals does measure to ideal proportions the chances of it being true H&A are slim to none. If you really do your homework Pharmer you'll learn very quickly that not all diamonds being defined as "ideal" have the same optical properties. A stone cut to H&A standards which can be proven with photographic evidence is valued way more than a stone presented with only a GIA or Sarin. Ie. one ideal diamond can have optical symmetry on par with scrambled eggs while another can be cut to such precision (a very time taking and time consuming venture) that it displays the H&A phenomena which are only found in the most precision cut stones.

 

[Todd07]

I pasted this quote from the Rappaport section of PS. As a newbie, i had a jeweler quote me rappaport and although it sounded good, I didn't have a clue how to interpret Rap pricing.




I believe it's good advice and non professionals should always double check their B&M pricing against the market pricing here on PS.

----------------
On 10/14/2004 9:45:52 PM crankydave wrote:

Price lists are designed for diamond industry professionals. Would you expect to be able to use say a doctor or a pharmacist’s professional tools? So remember if you want to use these lists, or do a deal with a jeweler based on the pricing info in them then be prepared to be ripped off.'

Like a couple of other threads, I disagree with this characterization.

Dave
----------------

 

[Andrew8527]

Let me bump this up and share my similar experience (which has been noted in another thread as well). I've got a local "broker" who I've given a certain set of parameters to (from table % to pav. angle etc). Told him I'm after the top few %, cut-wise. Of course he had nothing in-house that was even close to "ideal" cut, so he gladly consulted RapNet to see what was available. Yesterday he came back with two options, both of which were very close to the criteria I provided (finally someone who understands!!). Thanks to some folks here, turns out one of them should be avoided and the other might be worth a look.

At any rate, as I digress.....the issues at hand are: B&M and Rap. This broker simply explained the price breakdown to me. $/carat and % off list. Then add 10% for his cut. Simple. Black and white. I must admit, I kinda like that--there's no mystery to how the price came about. RapNet sets a $/ct, and he adds 10%. An example, the first stone I listed in my other post [1.09, H, VS2, ex/ex, .8HCA, GIA, "AGS0", laser inscribed "H&A"] was 18% off list, plus his 10% ==> $6095. And now, what I'm understanding from the experts is to just take that end price, forget about $/ct and %off, and see how it compares to some of the stones at WF or GOG.

[EDIT] This quote is actually straight from the PS Rap Tutorial, NOT Todd07...sorry Todd!: "So remember if you want to use these lists, or do a deal with a jeweler based on the pricing info in them then be prepared to be ripped off."

Based on my comments above, am I falling into the trap? Or is this stone priced pretty competetively, albeit using RapNet? How should he arrive at a price, if he weren't to consult Rap?

Thanks in advance.

Andy

 

[denverappraiser]

No, use of Rap is not evidence that you are being ripped off.

Many jewelers and brokers use the Rappaport Report as way of pricing their wares and many of their suppliers will quote them prices in the same way. It’s a fast and easy way for them to price an inventory that changes rapidly. The reason for the above advise is that many of the less credible dealers use this sheet as part of their sales pitch and explain that they will get it to you for “less than wholesale”. Since the list does not take into account some critical information, it can be a cover for some deceptive practices by dealers who are trying to hide something. I agree with Dave, this is poorly worded in the tutorial and it should probably be changed.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[Andrew8527]

Got it, thanks for clarifying Neil.

 

[Brian Knox]

"So remember if you want to use these lists, or do a deal with a jeweler based on the pricing info in them then be prepared to be ripped off."

Sorry , but I've gotta call goat rope on this one.

The vast, overwhelming majority of all diamond transactions above the consumer level are conducted vis-a-vi Rappaport.

But then somehow it is not relevant or is somehow cheating the consumer to bring up the rap list with the consumer.

Doesn't hold water

 

[denverappraiser]

Brian.

Dealers are much more aware of the issues surrounding Rap than consumers are. The reasons why one stone is sold at a greater discount than another is pretty well understood among the trade. The problem is that it has become a common practice for dealers to describe the pricing in Rap as ‘wholesale’ and then launch into a pitch about what a good deal they are on a particular stone without the slightest discussion of the other issues at play like cut and lab. Surely you agree that this can be a cover for some deceptive practices. I certainly agree that the warning about dealers selling ‘back of Rap’ needs to be reworded but I think the substance of the warning is valid. Consumers are regularly stung by this practice. It isn’t Rap’s fault but their document seems to be at the heart of it.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[Brian Knox]

----------------
On 10/15/2004 1:11:47 PM denverappraiser wrote:

... Surely you agree that this can be a cover for some deceptive practices. ... Neil Beaty, GG ISA
Independent Appraisals in Denver----------------

Hi Neil,

There are many things that can be used for deceptive practices, Eg. dubious lab reports, varying sarin numbers. unproven technologies, etc.

You would have to agree that there are in fact so many things that can be misused that it would be silly to summarily dismiss one or all because of the 'ability for misuse'

In the hands of an astute consumer (most PS members) rappaport is a valuable tool to compare values relative to vendors prices as well as pricescope listings.

 

[strmrdr]

I agree with brian that rap can be an important tool for consumers that spend the time to understand it.

I also agree with what Neil is saying that caution is needed when it is discussed and that the consumer know what is going on.

Like a lot of other things it is a tool and how it is used determins if its bad or good it and by itself is neither.

In this case the jewlers explaination seems plausable and it is easy to check if its a good deal using the pricescope price charts and search engine.
No harm no foul.

 

[denverappraiser]

Brian,

Pete said of his dealer:
" He pulled out hte rappaport report and showed on the chart the price for a diamond with my specs being $6300/ carat. The price he said from that rapp report was that I shouldn't be paying more than $7623 and that he would include a 5% discount because I was a referall which would be $7252."

This is suggesting that the relationship to Rap is the key attribute of a stone. I disagree with this characterization. Rappaport says that Ideal cut stones carry a premium of up to 15% and poorly cut stones have a can have a discount of up to 40% and they say their list is for GIA graded stones with correct grading only. Betcha he wasn’t shown THAT page of Rap. Given his data (Rap = $7623), the stone should have a ‘high cash New York price’ in the range from $4573 - $8766.. I would not describe this as especially useful information for his decision making process.

I'm not disparaging this particular dealer, or even especially Rappaport. This may be a fine stone and a fine deal but it's important to understand that he doesn't yet have complete information.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[Brian Knox]

Hi Neill,

I hear what your saying and agree mostly.

However, much of the comments have been based on the assumption that the B&M diamond was not as well cut as the other diamond.

I get some extremely finely made H&A GIA stones that from a cutter (sight holder) that deals only with B&M or traditional venues.

They do not (as of yet) have sarins for every diamond as most of their retailers probably do not request them.

Many B&M's are playing catch up with regard to sarins, etc.

Many others feel that it is like scheduling an appointment with a car salesman and asking the saleman to supply a trade magazine test drive review instead of test driving the car himself.

The market will determine who is right.

Or maybe another big player will determine who is right...

Because, speaking of playing catchup, GIA is make a huge catch up play that will probably change the way diamonds are sold.

I think its great, it empowers the consumer which makes my job easier.

edited to add: lame car analogy inserted as a gratuitous straw dog

 

[denverappraiser]

Brian,

You surely know from my various posts that I'm a big fan of quality b&m dealers. I think they add a great deal of value for the consumers and they tend to be underappreciated for it. I would never assume that because it's a storefront dealer that the stones are inferior. This is absolutely not the case. I do tend to count it a bad sign when the first thing the dealer does is pull out a copy of Rap and discuss a 5% referral discount.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[elmo]

On 10/15/2004 1:33:12 PM Brian Knox wrote:

----------------
In the hands of an astute consumer (most PS members) rappaport is a valuable tool to compare values relative to vendors prices as well as pricescope listings.
----------------

This I think is excellent advice for pricescope type consumers who are usually shopping for round brilliants at the very high end of quality. Rap is a good benchmark for comparing price differences amongst all the high-end "super" ideals e.g. take 3-5 diamonds of the same size category from each of ACA vs "expert selection", Superbcert, GOG's own selection, Eightstar, Overseas, etc. and come up with a reference point for the "brand premium". Where it gets tougher for a consumer like me is applying Rap to a nice 60/60...falls somewhere between 40 back and 15 over but where exactly?

But for comparing apples to apples (and where you've educated yourself enough to know the difference) it's relevant information.

 

[Brian Knox]

----------------
On 10/15/2004 2:29:48 PM denverappraiser wrote:

Brian,

You surely know from my various posts that I'm a big fan of quality b&m dealers. ...
Neil Beaty, GG ISA
Independent Appraisals in Denver----------------

Hi Neil

Yes, I am aware that you are very evenhanded and I respect you for that.

Furthermore, you are a great asset to this forum.

I was simply trying to point out that selling a GIA or AGS zero cut H&A diamond at a percent or two over rap is a margin that would entice most B&M's to do the deal and even throw in the added value items that B&M's bring to the table.


As far as:

"...I do tend to count it a bad sign when the first thing the dealer does (emphasis mine)is pull out a copy of Rap and discuss a 5% referral discount."

If that was the case, I would also agree with you on that.

 

[fire&ice]

To be frank, one jeweler did try to use Rap to tell me what a great deal the stone he was showing me was. I dismissed it saying "what that piece of paper says has nothing to do with what I want to spend."

Honestly, I felt in that occassion it was used deceptively.

 

[Garry H (Cut Nut)]

Hi folks, I have joined this a little late perhaps, but I wrote those words.

Be prepared to be ripped off does not = you will be ripped off, but for most users, that is what will happen.

I do not know many retailers who know much about the wheeling and dealing, and after 15 or so years of subscribing and 20 years of use, I know that I can not keep up with the dealer to dealer understandings and nuances of the Rap report in action.

Frankly Elmo and others, if you think you understand Rap in action, then I suspect you only think you do - like speaking Japanese - there are different levels of society and each has their own nuances of speech so they can detect level of social standard.

What is wrong with what I wrote?

I openly acknowledge that I can not keep up with Rap usage because I only buy about $1Mill a year in Antwerp, India and from Israel. Each market is different with differnt usage. How can any consumer know Rap?

 

[strmrdr]

Gary,
We know from on here on well cut goods that rap - around 20% is the best the dealers are going to get assuming that there are no other bad points against the diamond.
Lets say that rap is $5000 so -20% = $4000 so assuming a %30 low b&m margin that comes out to $5200.
So rap price is a pretty good price on it.

Now lets say it has florecence and not as well cut egl usa cert lets say rap - 40%.
5000 - %40 = $3000 + 30% margin = 3900
But wait a second we know to knock off 10% or so for the egl cert.
So that makes adjusted rap == $4500 we know it isnt that well cut not a dog but not ideal and the flourecence so knock another 10% off for a total of 20% and we hit adjusted rap of $4000
3900 is pretty close to 4000 dont you think?

Then we come on here and see what the internet price is and if the price is right we are good to go.

 

[elmo]

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On 10/16/2004 9:32:22 AM Garry H (Cut Nut) wrote:

Frankly Elmo and others, if you think you understand Rap in action, then I suspect you only think you do - like speaking Japanese - there are different levels of society and each has their own nuances of speech so they can detect level of social standard.
----------------

The point for the educated consumer buying ideals is not to understand the nuance but to understand relative brand/nonbranded pricing in a narrow range of color, clarity, and cut i.e. of the very top makes; for instance the very typical pricescope shopper wanting a 1.25 ct VS1-2 H color ideal. As I tried to say, when it goes much beyond that, it's beyond my understanding

.

 

[Garry H (Cut Nut)]

Well done Storm, you know level 1 Rap. There are several more levels.
And how many Newbies know that much or could be bothered to learn.

Unless there is some easy way to teach people to be proficient then I prefer to leave the current wordin.

It would be like trying to conduct an online clarity grading lesson.

Besides - once all the retailers thought they knew the Rap rules - the dealers add some nore nuances - that is the thing - it does not stay fixed in time.

 

[yowahking]

I agree with many issues of how Rap is misused. I agree with Gary that Rap is much more complicated than most people use it for. Those of us who buy large quantities of diamonds for many years learn the ways to look at stones in a paper with a quick glance and know which ones "pop" and which do not.
What I do not agree with is comments that B&M's generally have poor cut stones. Or that most H&A's will not match up to internet H&A's. Simply not true. I am not an AGS store but AGS stores have been usuing cut grades on diamonds for 20 plus years. Lazzare Kaplan and Keppie type companies were educating us on cutting before it was really talked about in gem magazines or for sure customers realized it. H&A's have been in my store since they first hit the scene, and most good stores jumped on the little scopes as soon as they were available, my first one cost $250, now they are tossed in with a 1/2 ct stone or bought from $25 to $100.
I have scanned my inventory with Gary's system for fun with very few surprises. Great stones score well, good stones score good, average stones score average. Even ran Sarins on some lame ducks just to see what the scores did.
If jewelers are intimidated by a plastic toy, they do not deserve your business.
If consumers think that a few emails and a toy make you an expert, that can be annoying for a jeweler who is really good at what he does.
These issues are good to discuss but are not as cut and dry as some seem to post.

 

[Garry H (Cut Nut)]

Well said Scott

 

[mdx]

Using Rap prices are definably not for consumers here are two of hundreds of trade Scenarios that happen all the time.

1) Every 5 weeks the DTC sight holders receive their boxes, in this example the prices are up say 5%, and crystals and eight grainers are scarce. Virtually overnight discounts are shortened in anticipation of a polished price increase on what is usually produced by the scarce material and also generally due to the 5% increase; Rap has not gone up as the wholesale market has not yet seen the effect. One month later the Rap algorithm picks the change as the goods flow into the market and two things happen, The rap price increases on some items and discounts react, some up and some down, depending a number of market factors.

Now a totally different scenario,

2) A dealer comes to see us and shows us a magnificent 1.0crt H SI1 Ideal Cut with Hearts and Arrows and we negotiate a price based on a discount off Rap. He then takes out a 1.crt H IF also Ideal Cut with Hearts and Arrows. Our reaction is, we would only consider it if it was discounted considerably better than the H SI1. Yes its an IF, but much more difficult to sell because of its notianal Rap price

Gary expressed it very well when he wrote

“Well done Storm, you know level 1 Rap. There are several more levels.
And how many Newbies know that much or could be bothered to learn.”

 

[fire&ice]

----------------
On 10/17/2004 12:31:36 AM yowahking wrote:

Lazzare Kaplan and Keppie type companies were educating us on cutting before it was really talked about in gem magazines or for sure customers realized it. ---------------

Perhaps I am the exception; but, 20 years ago I thought cut was paramount. Lazare stones opened my eyes to the importance not the jeweler.

 

[fire&ice]

----------------
On 10/17/2004 10:26:29 AM crankydave wrote:

Garry wrote:
I'm certain all will agree that, like any other tool, a rap sheet can be used deceptively. That fact that it can be, does not make it so nor does it make it the norm.
Dave
----------------

Well, the one and only time Rap was used w/ this consumer was to make a smoke & mirrors song & dance about what a great price off of rap said diamond was.

I know enough to know that a little knowledge can be dangerous. The utilization of rap within the trade is fine. I don't think it can be truly utilized by the consumer except on a very cursory level.