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Brand name value in the long run

Discussion in 'RockyTalky' started by tannet, Jan 17, 2010.

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  1. tannet
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    by tannet » Jan 17, 2010
    I had a debate with my bf about diamonds holding their value in the long run. After lurking around PS for a while, I''ve come to the conclusion that brand name doesn''t matter, but the quality of the diamond is most important. My bf, however (who has not spent much time researching diamonds), believes that a prestigious or well respected brand name (I don''t dare name any specific ones [​IMG] ) will hold its value better in the long run.

    What do you all think?
     
    


    


  2. Diamond Explorer
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    by Diamond Explorer » Jan 17, 2010
    In terms of the actual diamond. It really doesn''t matter who sold it under what brand or when.

    However, If you are looking at the entire piece of jewelry, then the brand and maker, can have a lot more effect on the value. In older pieces especially, Names like Tiffany, Cartier, and other fine old houses can greatly increase the value of the piece.
     
  3. neatfreak
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    by neatfreak » Jan 17, 2010
    Agreed. The diamond itself doesn''t really matter-but if it''s AGS or GIA certified it holds it''s value better (that being said it''s still not a good investment because you''ll still lose a lot).

    A branded piece however will certainly hold more value than a generic piece.
     
  4. misssoph
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    by misssoph » Jan 17, 2010
    This would only matter if you are planning to sell it. Jewellery is generally not an effective investment.
     
    


    


  5. Garry H (Cut Nut)
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    by Garry H (Cut Nut) » Jan 17, 2010
    Even if all the other advice given was wrong (it aint) You also need to know the brand will be around when you wish to sell, and still be selling ata premium.
    Lazare Kaplan for example established a long lived diamond brand, but they are looking pretty shakey right now.
     
  6. tannet
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    by tannet » Jan 17, 2010
    Thanks everyone for your input. I have no intention of selling anything. It was just a debate we had and I wanted to get the experts'' opinions. I guess since my bf was speaking more in terms of the piece as a whole, he was right about the brand name holding more value later on.
     
  7. Garry H (Cut Nut)
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    by Garry H (Cut Nut) » Jan 17, 2010
    You best make it very clear that he will never ever get any jewellery back to sell unless there is a world war that blocks all sunlight in a permanent nuclear night and you need the food more than the diamonds.
     
  8. Gypsy
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    by Gypsy » Jan 17, 2010
    Diamonds and jewelry aren''t things everyone knows about. Most people look to brands because brands = quality for them. That''s why certain brands hold their value, because they have a repuation for quality over time. It takes more time/knowledge to examine a piece of jewelry and judge quality, and price it accordingly for resale when it isn''t branded. And then you have to justify the price tag, without the brand boosting you. So I think for resale, branded pieces are easier to sell, because in some ways they sell themselves. Still a beautiful, well made, heirloom quality piece will sell itself too... to the right buyer.
     
  9. dreamer_dachsie
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    by dreamer_dachsie » Jan 17, 2010
    But even with branded pieces, they are not sold for a gain, or even for a break even, are they... no matter what there is not much inherent value to jewelry over time in the sense of inventment.
     
  10. Diamond Explorer
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    by Diamond Explorer » Jan 17, 2010
    It sounds like you are both right in some ways.

    A piece with a lesser known name attached could also be considered a 'better investment', because you dont pay as much premium for the name in the beginning (so you can get a better diamond deal), but if the brands recognition increases, so too could the value of the piece.
     
    


    


  11. tannet
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    by tannet » Jan 17, 2010
    I, personally, don''t care about brand names, in general. Like many of you, I would prefer not to pay a premium for a brand name as long as I''m getting a high quality item. My bf, on the other hand, thinks brand makes a difference. I have had a few discussions with him about e-rings and I am trying to push him towards going the PS route, but I think he may be a victim of the "Tiffany" marketing tactics (yikes!) . I hope to find a way to sway him away without being too pushy. I''d rather have more bang for his buck than the blue box.
     
  12. Lestat
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    by Lestat » Jan 18, 2010
    My 2 cents... Maybe some people you tell will be impressed by only the brand name such as Tiffany, but I think the majority of people you see every day probably won't ask you what brand your ring is, but they will notice the larger, more lively diamond you could purchase with your savings from avoiding the brand premium. Sure it's possible a brand name ring might carry more value in the future (but there's no guarantees of that, see Gary's post), but if you're not planning on selling it, and you don't intend to tell people you meet the current market value for your ring, what reason is that to compromise on the diamond? For some people, brand is very important, and that's fine as long as they're happy, but I think personally as long as the setting is good quality, I'd notice a well cut larger diamond before I'd notice a brand name engraved on the inside of a ring.

    If I had to choose a Tiffany diamond, I think I'd purchase my own idealscope to screen them, I wouldn't just trust "a Tiffany diamond is the best there is".

    Maybe he thinks you're trying to compromise by letting him buy a non-brand ring? Maybe he's thinking you don't think he can afford it and it's hurting his ego? Maybe he might change his mind if he knew he could actually get a bigger and better quality diamond for the same money? It might even be easier if uses a vendor that will provide him with more information like idealscope images and magnified photos, etc that prove the diamond is a great performer. Knowledge is power.
     
  13. denverappraiser
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    by denverappraiser » Jan 18, 2010
    It’s important to decide what you mean by ‘value’. The assumption in most of the above answers is that it’s how much money can you recover on resale. As has been pointed out, this isn’t necessarily the best way to evaluate a jewelry purchase but I’m not sure it’s even correct to say that brand name items are a better ‘investment’. Let’s take an example:

    Item A comes from Tiffany and costs $20,000.
    Item B comes from Brand-X Jewelers, is otherwise similar to all but a trained eye, and costs $10,000.

    Hold them both 5 years and then resell. Let’s make up some resale numbers… Let’s assume that you get $10k for the Tiffany piece and $2500 for the other. That’s a 50% loss on A and a 75% loss on B so you could argue that A was a better investment but was it really? At the end of the day, on item B you walked away with $12500 plus 5 years worth of interest on the $10k that you left in the bank for another $2500 or so and on the branded piece you only have the $10k to show for your ‘investment’. That’s 50% more cash on the bottom line for column B! Which was a better investment again?

    Buy jewelry because you love it, not because you expect to ever see your money again. If buying a branded item increases the enjoyment of the piece because you or he feels better knowing that he bought the ‘best’, that’s value. Whether or not this is worth it to YOU depends more on your own temperament than it does on the details of the jewelry.

    Neil Beaty
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    Professional Appraisals in Denver
     
  14. Bella_mezzo
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    by Bella_mezzo » Jan 18, 2010
    what he said:) that''s a great explaination of it though I don''t think the numbers would be so far apart, so I think the branded piece would be a n even worse "investment"
     
  15. denverappraiser
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    by denverappraiser » Jan 18, 2010
    I agree, it’s unlikely that you’ll be able to realize 50% of retail on the resale of a branded piece and that this just makes the numbers worse for the ‘investor’. Depending on what you buy and how well you buy it, the resale recovery percentage on a more generic item may actually be more than on a branded one. This too would just make the numbers look worse for the status brands. I just picked those numbers and as example and because the math is easy. It IS correct that Tiffany, Cartier and similar brand names both makes a piece easier to sell and adds a price premium in most markets.

    Again I point out that this is a fishy and probably inappropriate definition of 'value' in terms of jewelry. Using it, the person who kept ALL of their money in the bank makes out better than either one. The reason to buy a diamond is because it reminds you that you're loved, that you're successful, that you're beautiful or whatever it is that makes it brighten your day to look at it. This is the value of the things. They serve no real purpose beyond these sorts of benefits. If they deliver on these things then they have value, if they don't then they're a bad deal. If a blue box or the signature of a fabulous artist makes them better at this, I have no problem in agreeing that it was worth the money.

    Neil Beaty
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    Professional Appraisals in Denver
     
    


    


  16. GearDriven
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    by GearDriven » Jan 18, 2010
    If it''s an engagement ring we are talking -- I would be really worried about why he wants to be able to sell it for good $$$ later :)

    Any other diamond -- look into who has a trade-up program. Then hope they are still around and honoring it :)

    My uninformed opinion: I think any diamond today will lose value over time as the science of cutting gets better and better...
     
  17. ChunkyCushionLover
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    by ChunkyCushionLover » Jan 18, 2010
    There have been threads on here or elsewhere on the internet of people trying to sell their tiffany pieces. People generally think that you get more percentage wise for a branded piece like a tiffany''s ring than a non branded piece. This is often not the case and not worth making it a consideration. You get a lot more if you are able to put up your ring on consignment than if the dealer has to pay you cash up front before selling and factors like this, and if the diamond has a GIA certificate and whether you allow the buyer to get an independant appraisal carry much more weight than the brand.

    Buying jewelry for resale value is a terrible investment, in some ways it is like buying a car as soon as you take it away from the jeweler''s it loses value, often 50% or more of its value even though it could look brand new. The fact that its you not the jeweler trying to sell it makes the most difference.

    The argument that if two pieces cost the same 10k each and one is Tiffany''s and one is not than the tiffany''s piece will retain up to 50 - 60% while the non branded may only get 40% is not always true and it always comes down to finding a buyer, but one thing is for sure it is highly unlikely you will ever get back even close to what you paid for any diamond purchase.

    The part where your bf is mistaken is not that branded pieces carry more resale value as a percentage but that this should be a factor when considering puchase.
     
  18. Paul-Antwerp
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    by Paul-Antwerp » Jan 18, 2010
    I think that the discussion about brands is always tainted, because it is very difficult to define what a brand actually is.

    I remember me discussing this at the first Diamond Cut Conference, where a speaker said that a true brand involves a brand-premium, in other words higher prices for the same product. As far as I am concerned, brands can also indicate lower pricing, for instance because of volume or other increased efficiencies in distribution. Then again, at that level, I must be disagreeing with traditional marketing-science.

    When looking at the resale-value of a brand, one probably must consider two potential resale-situations. Some brands will guarantee a buyback-price, which is valuable as long as a brand exists. On the other hand, some brands may reach such epic notion, that the rarity of its product only increases its value after the brand ceases to exist. Consider Bugatti-cars as an example.

    For many brands however, where the brand-value often is marketing-created, and thus involves the payment of a hefty brand-premium above the intrinsic value of the product, the potential loss in case of a private sale is indeed bigger.

    In that way, I found the example of a Pricescope-buyer, who some years ago managed to get his branded diamond to be set by Cartier, interesting. If that diamond-brand reaches some level of recognition, that jewel might obtain a collectors-value because of its rarity.

    All this gets me thinking about a weird thing: If I die in a car-accident tomorrow, would the remaining Infinity-stones maybe increase in value?

    Sorry about my morbid thinking.

    Live long,
     
  19. denverappraiser
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    by denverappraiser » Jan 18, 2010
    I think of branding as a bundle of benefits that are represented by the presence of the brand thereby making it easier for shoppers to buy with confidence in knowing what they’ll get, whether that’s good or bad. My grocer has a house brand of various products that are generally less expensive than the nationally advertised versions of similar things but the ‘brand’ still stands for consistent quality, good customer support, etc. McDonalds is one of the best recognized brands in the world and their burgers are less expensive than most of their competitors. There are zillions of brands out there where one of the things they stand for is ‘good value’. I think, actually, the #1 thing for building a brand is consistency in delivering whatever it is that you’re delivering. If you think of the name of a product or service, and that name instills in you a feeling of what you could expect by doing business with them, that’s a brand.

    The power of a brand can pass through to the resale market. There aren’t all that many people who are aware of the Infinity brand (yet) but I think you would find customers in right markets who WOULD prefer to buy one over the competition because they know what it stands for and they value that collection of benefits. That's brand value. Eightstar is another example. They have a small but very loyal following. Tiffany has a head start on both of you and there’s a lot more people for whom that name means something but in 100 years, Infinity may be THE premier brand for diamonds and your great-grandchildren will be signing autographs.

    Neil Beaty
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    Professional Appraisals in Denver
     
  20. tannet
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    by tannet » Jan 18, 2010

    LOL...he has no intention of selling an e-ring later. That''s just the type of shopper he is. He works in an industry of high end sales and he often talks about how much value the items he buys will have even later on down the line. For example, one item he has was worth $9K when he bought it about 4-5 years ago. The full retail price is now $12K. Of course, if he ever tried to sell them (which he we will never do!), he wouldn''t be able to sell them for $12K because they are not brand new, but he could probably get half that. It''s just the way he thinks when he''s putting a lot of money into something.

    I''m just trying to figure out ways of talking him out of the branded pieces. I''ve sent him the link to PS, but he hasn''t made the time to snoop around here. I really hope he takes it into consideration.
     
  21. ChunkyCushionLover
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    by ChunkyCushionLover » Jan 18, 2010
    Neil,

    I don't know if all infinity dealers offer the 80% lifetime buyback like high performance diamonds does but that would certainly set the low end price for this particular brand of diamonds.

    But considering that BGD Siganture, WF ACA, HPD Crafted by Infinity and GOG Signature, all have very similar optics on their top quality H&A rounds I highly doubt there will ever be a significant premium or any resale value over the 80% lifetime buyback offered, unless someone could make a purchase with the purpose of using it for an upgrade.

    I've asked the question before on the differences between them if any and no vendor has been willing to explain or really prove a "significant" difference between their branded H&A rounds and the other three PS competitors. Even if one brand ceased production they would still not want to give up their cutting allowances for fear of being copied. For a brand to earn a premium over what was paid there has to be rarity and a lack of reproduceability setting it apart from other options and I don't see that as the case with CBI diamonds. One of a kind, or limited production jewelry and watches and things that can be called antiques certainly satisfy this criteria but precision crafted diamonds certainly don't qualify in my opinion.

    Since you brought up Infinity and Mr. Slegr himself is posting here lets say I buy an Infinity diamond today for 10k under what circumstances will I ever be able to get more than the 8k I bought it for, discounting of course if I could find a buyer myself.
     
  22. DiamondFlame
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    by DiamondFlame » Jan 18, 2010
    Back to the OT, perhaps what your BF is loathed to admit to is 'the bragging' rights he gets by proposing you with a Tiffany ring... All this talk about 'holding value' sounds like a smokescreen to me.
     
  23. denverappraiser
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    by denverappraiser » Jan 18, 2010
    ‘Discounting of course if I could find a buyer myself’ is the entire issue. Finding a buyer is where it’s at. Presumably the resale marketplace ends at another consumer. You can sell directly to that consumer, you can sell to a dealer who will then resell to a consumer, possibly through a chain of other dealers, or you can hire a broker to assist on one of the above for a commission (a consignment sale). These are your only real choices although there are lots of competitors and a variety of strategies within those. The question then becomes one of how long it’s going to take, how much is that end buyer going to be willing to pay, and how many fees are going to be involved both in terms of direct costs like advertising and lab work and indirect costs like commissions. If the stone sells better, faster or for more money because the buyer recognizes the brand and does the buy because of what it stands for, that’s good. The brand added value. It’s made the deal. If the buyer doesn’t recognize the brand or doesn’t care then it’s neutral and if they recognize the brand and dislike it then it’s bad.

    In the case of Infinity policies, as with any company, it’s going to depend on the details. I don’t really know them all that well. If the 80% buyback is being offered by HPD, it will depend on the ongoing existence of HPD and contractual details like whether they will offer this same buyback program to a 3rd party buyer where they weren’t part of the deal. I rather doubt it. I would be very surprised if this program is transferable. If the offer is from Infinity directly, which I think is the case, it will depend on the ongoing success of Infinity for the same reasons. All the same issue applies. It’s also entirely possible that HPD and/or one of the other dealers, or one of their competitors I suppose, would be willing to make a consignment deal to broker a stone under the right circumstances, even if the original 80% offer is invalid for whatever reason.


    Neil Beaty
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    Professional Appraisals in Denver
     
  24. ChunkyCushionLover
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    by ChunkyCushionLover » Jan 18, 2010
    Maybe before you present infinity diamonds as THE brand for the future you might want to look into this? [​IMG]

    To refocus other than the 80% buyback why is it easier or more profitable(easier to get close to what you paid) to sell an infinity H&A over any other H&A round?
     
  25. denverappraiser
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    by denverappraiser » Jan 18, 2010
    I didn't present Infinity as THE brand for the future of diamonds. I suggested that 100 years of work on the part of Paul and his heirs MIGHT have that result. He faces some stiff competition and there are some formidable players with a significant head start.

    I also didn't say that an Infinity was easier to sell than ANY other variety of stone, H&A or not. The hard part of selling is in finding the buyer. This is the case for both professional sellers and amateurs alike. If there's a firm bid at 80% of cost, that's a good place to start but that doesn't answer the whole question in terms of setting the lower limit because we don't know the details of the offer (at least I don't) and any offer is only as good as the company making it. The upper limit is going to be set by the ability to locate a customer and the costs associated with that, just like it is with anything else. Where a particular deal lands between those two limits, even after they're known, is going to depend on a combination of skill and luck on the part of the seller.

    Neil Beaty
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    Professional Appraisals in Denver
     
  26. asforhim
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    by asforhim » Jan 18, 2010
    When it comes to diamond solitares or simple pieces, the branded product will generally hold a slightly higher residual value over time but like oldminer said you will be lucky to get 50% its value.

    IF on the other hand your''re talking about more artistic pieces by the likes of Van Cleef, Buccellati, etc. you will occassionaly see an increase in value over time. I personally own a Buccellati right hand ring purchased about 10 years ago. The identical ring recently sold in a Sothebys auction for 30% more than I paid.
     
  27. tannet
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    by tannet » Jan 18, 2010

    I don''t think this is the case. He''s actually a very modest guy. I honestly believe he has just been mystified by the superb marketing and branding tactics. If I could just get him to understand the quality in the stones from BGD, WF, GOG, etc..., he would make the wiser choice. He is all about quality and performance when it comes to other things. He has just been misled by the best marketing. He did admit that maybe he needs to do a little research. I''m just hoping he does exactly that before spending any money!
     
  28. Garry H (Cut Nut)
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    by Garry H (Cut Nut) » Jan 18, 2010

    My car is a great investment.


    They are only making 1 or 2 million (unless they sell really well)

     
  29. Serg
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    by Serg » Jan 19, 2010

    re:On the other hand, some brands may reach such epic notion, that the rarity of its product only increases its value after the brand ceases to exist. Consider Bugatti-cars as an example.

    Which company could Build old Bugatti car now? What could be price for such replica ?

    How many companies will have technology to copy Infinity diamonds 20 years later ? ( I think what some companies could do it right now)

    Cost of Human work is more and more higher ( specially for Art work) . Cost for human work is grooving much faster than cost for gold, diamonds and other commodities .

    Real cost for current SuperIdeal diamonds can not be higher in 20 years ( if you account inflation for material cost) because CNC will easy produce exactly same or Even Better with minimum human time
     
  30. winternight
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    by winternight » Jan 19, 2010
    My husband really wanted to purchase a Tiffany or other branded ring. We also looked at VCA and Cartier. Anyways, I ended up finding a great deal on a second hand Tiffany and that worked out well for both of us. I didn''t really bother to talk him out of it, I just went within his budget. I don''t know about your fiance but my husband works alot and has very little patience to figure this kind of thing out -- that''s more my area -- so maybe a second hand ring would work for both of you??

    Frankly, I think in terms of resale value I probably did great since I bought at a discount and if I ever did want to resell I''d probably break even or take a tiny loss (not that I''m planning too) based on the increase in cost over the past few years and because I didn''t pay retail to start with. Some brands hold up their value, for example I''ve been looking at VCA alhambra pieces and they are very close to retail, maybe at a 10-15% discount --- plus keep in mind many of these pieces were purchased for thousands less several years ago and due to price increases still sell close to current retail.
     
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