Average Profits on a Diamond Sale?

[find45di2]

I am curious to know the average mark up or profits made on a diamond purchased at a good retail price?

I am not trying to knock a sales person because I understand that people are in business to make profits, I am just curious to know what the profit would be on a diamond?

Let's say a diamond like this example from whiteflash.com:
WhiteFlash 1.25CT

Report: GIA
. Shape: Round
. Carat: 1.25
. Depth %: 62.2
. Table %: 58
. Girdle: TN-STK
. Measurements: 6.84-6.92X4.28
. Polish: Very Good
. Symmetry: Very Good

ASKING PRICE: $7,055.00

I realize this is somewhat of a sensitive topic since it is how people make a living so I respect it completely. I too am a business man so I am just curious at what percentage a diamond is usually marked up at wholesale/good retails pricing? I also understand that mark up will be different from store to store, person to person, and website to website. So I am just looking for tips and ball park info. Trying to understand where the cost/value comes into play.

Is this diamond marked up 10%, a lot more? even less?

Any tips on understanding mark up on diamonds will be helpful.

 

[Garry H (Cut Nut)]

Since you ask, that diamond is not owned by WF, it is listed on B2B boards for trade members. Your 10% is very close to the mark and this is before shipping, insurance, staff to talk to you and perhaps call the stone in to tell you what it is like etc.

The restaurant you proposed in with that diamond would probably make more out of the deal than the vendor.
It is a fiercely competitive market

 

[find45di2]

Hi Garry,
Thanks for the response and understanding. So that makes sense on why some of the retailers will shoot for outrageous numbers and then drop down. Guess it is all on trying to get as much as you can, without ripping someone off. Guess i'll just have to put some trust in the seller and the diamond my eye likes best


So if a diamond is owned at the average trade price, is a common asking price roughly 10% from that? Or are your comments around a person selling a non-owned diamond? How does it differ when you actually own the diamonds?

 

[strmrdr]

The lowest listed price on PS for virtual stones is around 6-10% profit margin.
On owned stones it can be a little higher but more service for the money also.
They can buy them in bulk and save a few bucks on the in-house stones and make a little more.
But in the end with the added service, it likely comes out making more money just drop shipping which WF doesnt do but some its all they do.

 

[Garry H (Cut Nut)]

I concur with Storm.

When vendors buy diamonds they are generally buying the cream and because they must invest their own (or banks) cold hard cash - they will expect a higher margin to cover the higher cost - but often also with a longer stock holding time.

After having bought a stone - they will then do more work (added value to you) on that stone compared to the drop ship version that you identified above.

A 10% gross margin can quickly become a -2 to +2% nett margin after shipping, returning unsold, getting stuck with some failed deals as there is a 2 - 4 week return window (she told the guy to get lost etc) and some clients buy more than 1 stone from different vendors. That is before paying staff costs to talk to you, arrange shipping, pay admin and accounts staff etc.

And then there is the delivery that is placed on the doorstep and not signed for.