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Help with understanding diamond pricing

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pfunk

Brilliant_Rock
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Joined
Dec 2, 2014
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After reading for hours and hours on this forum for the last month and a half leading up to my diamond purchase, I feel like I learned a whole lot about how to pick a very good round brilliant diamond, but I still can't seem to figure out the how/why certain diamonds are priced the way they are. I know there are things that add a premium, such as H&A designation and AGS grading, but it doesn't seem like the "premium" demanded is always equal.

For example, the stone I purchased is a 1.79c AGS 000, I color, VS1 clarity. http://www.jamesallen.com/loose-diamonds/round-cut/1.79-carat-i-color-vs1-clarity-sku-280487

Here is a 1.71c GIA graded good cut, very good polish/symmetry, I color, VS1 clarity. http://www.jamesallen.com/loose-dia...carat-i-color-vs1-clarity-good-cut-sku-159556

These are from the same vendor, and the price on my stone is only $360 (2.5%) more than the lower quality, smaller stone.

I read on here that AGS 000 commands a premium of about 6.5% over GIA XXX. This other stone isn't rated GIA excellent in any categories, and is only priced 2.5% lower than mine. It also appears to have an older certificate which means it has been on the market for a long time or has been returned perhaps?

Is there a lot more to it than the certificate, cut, clarity, color, and carat weight or am I missing something? I am guessing there are way more variables that play into the price that I don't know about yet?
 
Yes, there's lots of "noise" in pricing. There was a very long thread about this last summer in which some dude wanted to build a model to price out diamonds using a number of factors (like the 4 C's, H&A, and some others). Everyone, especially the veterans, basically told him to stop wasting his time.
 
Thanks for the info. I did go to the vendor and asked for them to try to explain why the price for the lower quality diamond would be so similar to the higher quality one. After looking over both diamonds for quite some time the rep said that it must be due to the market price at the time they purchased the stones. Market price must have been higher when they acquired the gia good cut stone.
 
teobdl|1421303611|3816655 said:
Yes, there's lots of "noise" in pricing. There was a very long thread about this last summer in which some dude wanted to build a model to price out diamonds using a number of factors (like the 4 C's, H&A, and some others). Everyone, especially the veterans, basically told him to stop wasting his time.
Click to expand...

I don't think it's a waste of time if you have the data and you've narrowed down a range. I think it would allow you find underpriced diamonds.
 
Thanks for posting that Molly. It was interesting for awhile but there was sure a lot of math and then it got too far off track before it died. It is interesting to try to come up with a very objective, concrete model for diamond pricing, but seemingly impossible due to the fact that much of diamond assessment seems to be, at least in part, subjective.

I was more or less hoping someone might point out some of the things that affect the price that may not be easily observed by looking at diamond images or the certificate. I looked at diamonds for awhile before purchasing and typically had very narrow search parameters. I did this because I did not want to stray too far from what I had determined in my mind to be the "ideal" or "sweet spot" area for me. I didn't want to get too risky and try to find the "terrific deal" on a diamond priced lower than it should be. I figured if I did that I might miss something and end up finding out it wasn't the great deal I thought I was getting. I'm simply too new to all of this to risk that, so I went for the safer stones, even if it meant I might be over paying a bit for them.

But even with my narrow search parameters, I was confused at times. For example, I was finding stones with SI clarity, which were otherwise VERY similar to the stone I selected, that were priced higher than my VS1. I never intended to buy a VS1, but it was at the same price point so I figured why not.

Then I found the stone mentioned in my first post that was, at least to me, of MUCH lower quality than the one I bought but at nearly the same price. I just couldn't figure out how that could be, but after hearing how complex the diamond pricing really is I suppose I shouldn't be too surprised. Suffice it to say that figuring out why every diamond is priced the way it is is likely more of a chore than it was to educate myself on how to tell a good diamond from a bad one.
 
My advice is always to get the best diamond that you can buy with your budget, but don't pay for what you can't see. This allows you to maximize carat weight.

The best value--in my opinion--is an eye clean, structurally sound H SI2 with faint fluorescence, just barely missing superideal cut status, sold from a non-premium vendor (like James Allen), with VG symmetry and polish, and purchased when the market is at a dip.

But noise comes into the pricing picture so that sometimes an SI1 or even VS2 with the same stats is priced just $100 more than the SI2 (not common, but yes I've seen it). In this case, you might want to go w/ the VS2 to avoid some worries that people may have about low SI's.

So to make sure you're capturing the chunk of the diamonds you might interested in without missing any "special deals", search this way:
"show me H-G, VS2-SI2, ideal-superideal cuts, under $7,500"... sort by carat weight... start at the heaviest looking for a nice photo with nice cut proportions until you find a few you like.
 
Thanks for those links Molly as they were very helpful. As he points out, you have to adjust pricing as the market fluctuates, and if you don't it can confuse the consumer. That is exactly what seems to have me confused, as it appears I am finding some diamonds with prices that are reflective of a stronger market than the current one.
 
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