something iv been thinking about - Diamond pricing and consumer budgets

[strmrdr]

Prices have risen but the consumers budget has not risen to match it.
Polished prices are not in tune with peoples pocketbooks.
The amount budgeted has remained fairly steady at PS coming in around $4000 - $6000 total since Iv been here.
For that money people are looking for the biggest, best cut diamond with acceptable color and clarity.
When I first came to PS that was I/si1 then higher colors came into popularity for a bit as a few people complained about I color diamonds. Now it has came full circle and I/J vs2/si1/si2 diamonds are hot.
The size has remained about the same but the acceptable color and clarity has dropped to keep them in the same price range with the increases in price.
The acceptable color and clarity cant go much lower so either prices are going to have to steady/go down, budgets go up or size go down to maintain momentum.
Consumers arent willing to do the last 2 so that puts increasing pressure on prices.

What do you think?

 

[aljdewey]

Date: 5/26/2005 9:14:20 AM
Author:strmrdr
Prices have risen but the consumers budget has not risen to match it.
Polished prices are not in tune with peoples pocketbooks.
The amount budgeted has remained fairly steady at PS coming in around $4000 - $6000 total since Iv been here.
For that money people are looking for the biggest, best cut diamond with acceptable color and clarity.
When I first came to PS that was I/si1 then higher colors came into popularity for a bit as a few people complained about I color diamonds. Now it has came full circle and I/J vs2/si1/si2 diamonds are hot.
The size has remained about the same but the acceptable color and clarity has dropped to keep them in the same price range with the increases in price.
The acceptable color and clarity cant go much lower so either prices are going to have to steady/go down, budgets go up or size go down to maintain momentum.
Consumers arent willing to do the last 2 so that puts increasing pressure on prices.

What do you think?

Completely agree, Storm....I think a few factors have contributed to this:

1. Pricing has skyrocketed steadily since about 12/02 and shows no signs of slowing, and as you pointed out, budgets still remain in the 4-6K range.

2. After a few brave folks bought and posted pictures of well-cut I and J stones, many started to see that the stones were indeed "near colorless" and faced up much whiter than their "mental" expectation thought they would. I'm in the process of buying two J stones.....I never thought I'd buy a J, but after seeing all the lovely Js here, I'm confident in this purchase.

3. Other followed those initial groundbreakers, and now it seems the stones of choice are H/I/J, SI stones.

4. Folks are also trying to stay in budget by selecting "almost H&A" stones and avoiding the premium.

I think it's true that it would be tough to go much lower in color/clarity without a visual sacrifice, so I think you'll see the sizes going down a bit next.

 

[northstar_78]

style="WIDTH: 90.41%; HEIGHT: 110px">
2. After a few brave folks bought and posted pictures of well-cut I and J stones, many started to see that the stones were indeed 'near colorless' and faced up much whiter than their 'mental' expectation thought they would. I'm in the process of buying two J stones.....I never thought I'd buy a J, but after seeing all the lovely Js here, I'm confident in this purchase.

3. Other followed those initial groundbreakers, and now it seems the stones of choice are H/I/J, SI stones.

I'll add my $0.02...

1. Consumer budgets may be set at a 'fixed' amount but the price of precious metals isn't! The fact that the color of any stone can be improved by setting it in either platinum (pricey intial investment), 14K/18K white ( might require $$$ to maintain color) or white gold/palladium (harder to find and adds additional cost) is another factor in this equation.

2. H/I/J stones that face up white work on so many levels but setting them to showcase their beauty may add an additional cost. Maybe that is why the size has remained constant, since we're opening our wallets to pay out more for the ring itself now then before. What is the "average" size nowadays?

3. What might also be keeping the standard "size" of a diamond constant is the fact that there is a lot of leeway involving cut. A well-cut diamond may appear to be larger due to its brilliance vs. a larger stone that isn't as well cut BUT spin that around and going the other way works just as well. Are consumers compromising on both ends to get to a similar size? Size is relative in many ways and some might justify getting that Ideal by getting it in a smaller size and others might justify getting a larger stone by losing a few H&A...maybe we are all meeting somewhere in the middle.

4. What about upgrades? Every vendor seems to offer them on not only the stone but the setting. I'm wondering of the $4k-$6K spent initially how much is spent on upgrades later? The set size and budget might work for the majority of couples starting out and because the possibility of a larger rock looms in the future they are content and see no need to increase their original budget or size of stone. This could account for the fixed buget and set stone size.

 

[aljdewey]

I hadn't really given much to the precious metals element, but I confess I don't see that as being any kind of significant factor relative to the H/I/J color.

People's issues around which metal to choose, in my time here, typically have more to do with the shank and questions about wear than anything else. I've never seen a problem with setting these *value* stones in any of the metals listed....as long as they're white, it's fine.

I personally don't think H/I/J stones require any "special treatment", elaborate setting to be "showcased"; some of the nicest I/J examples in the SMTR thread are set in simple solitaire settings and look amazing. I really think that CUT has more to do with showcasing a diamond.

Also, the price of metals has risen somewhat, but not nearly as exponentially as the stones.

 

[Mara]

the other interesting factor is the settings.

originally it was all about tiffany style solitaires or something basic. but now we have the elaborate pave rings and halos that add hugely to the cost of the entire ring. how are customers splitting up that cost? when we were shopping, i didn't think that our setting would end up costing $2k, in the back of my mind i figured something like $700 and be done with it.

so next steps if the more elaborate settings continue could be dropping of size OR people could decide to do something like more temp settings and then getting the setting they want in a year or so. personally if i knew that i was just getting one diamond (no upgrades) and i had a fixed budget and my setting was going to be $2-3k, I'd knock that down to $700 with a plain setting (fineline by le or something) that is unique, and then get the biggest rock i could, knowing how prices are moving up up and away with stones. the prices of metal have gone up since we bought, but nowhere near the cost that stones have increased and continue to rise.

kind of a catch 22. what do spend on the diamond or the setting?

re: acceptable color and clarity, i even admit to recently having a hankering for a well-cut K SI2 for a pendant. having seen some of the gals pendants on here, and having one of my own, color is very hard to see on something like the neck, just like the ears. but there is literally 1-2 well-cut K stones to be found much less SI2. however, the same could be said last year for J SI2s...there were really hardly any...the market just didn't seem to be there. so who knows, maybe next year we will see some K stones, i don't know about further beyond that but WF does have one K in-house that is well-cut, I think GOG does too..but I believe they are both VS. so who knows what we'll see next year but i think vendors should pay attention! the masses no longer just want E VS as a sign of quality!

 

[aljdewey]

Date: 5/26/2005 12:11:34 PM
Author: Mara

originally it was all about tiffany style solitaires or something basic. but now we have the elaborate pave rings and halos that add hugely to the cost of the entire ring. how are customers splitting up that cost? when we were shopping, i didn''t think that our setting would end up costing $2k, in the back of my mind i figured something like $700 and be done with it.

so next steps if the more elaborate settings continue could be dropping of size OR people could decide to do something like more temp settings and then getting the setting they want in a year or so. personally if i knew that i was just getting one diamond (no upgrades) and i had a fixed budget and my setting was going to be $2-3k, I''d knock that down to $700 with a plain setting (fineline by le or something) that is unique, and then get the biggest rock i could, knowing how prices are moving up up and away with stones. the prices of metal have gone up since we bought, but nowhere near the cost that stones have increased and continue to rise.

Hadn''t thought about the settings from that angle, but completely see the point there. In fact, we did the same thing.

On a limited budget, we put nearly all the money into the stone and did a plain $80 Tiff-style setting. We considered the setting "disposable" and upgraded the setting six months later.

Our motivation in putting nearly all of the money into the stone was my desire to avoid ever upgrading the stone, and spending nearly all the budget on the stone itself let us get a stone that I''m happy with for a lifetime.

To Mara''s point, most here have been able to get the more elaborate settings they desire by going with value stones. As prices continue to jump, it may be that people cut back on the elaborate settings right out of the gate and plan to upgrade the setting instead of the diamond as a way to stay in budget.

 

[strmrdr]

yikes AL and I agreed its the end of the world :}
Actualy your post on another thread brought into clarity something Iv been noticing for a while and promted me to post this thread about it.

 

[strmrdr]

Date: 5/26/2005 12:11:34 PM
Author: Mara
the masses no longer just want E VS as a sign of quality!

Is that true or is it that E VS is priced out of range so J/si is acceptable to get more size and or lower the price?

 

[aljdewey]

Date: 5/26/2005 7:08:59 PM
Author: strmrdr
yikes AL and I agreed its the end of the world :}
Actualy your post on another thread brought into clarity something Iv been noticing for a while and promted me to post this thread about it.

Well, Storm, it''s easier when you listen to reason. LMAO

Yeah, several of us have noticed the same trends for a while......now if we could just get more vendors to notice it and stock more in that range - that would be amazing!

I actually just purchased J stones......NEVER thought I would. When I first came here, I was MENTALLY set on F, VS2 at the most! But when so many folks post amazing evidence on how WHITE these value stones can be, it''s kind of hard for those preconceived notions to sustain themselves.

 

[aljdewey]

Date: 5/26/2005 7:11:52 PM
Author: strmrdr

Date: 5/26/2005 12:11:34 PM
Author: Mara
the masses no longer just want E VS as a sign of quality!

Is that true or is it that E VS is priced out of range so J/si is acceptable to get more size and or lower the price?

Honestly, I think it''s a little of both.

I think that people *are* pleased with the quality that J/SI represents once they SEE them and realize that their preconceived notions (stones will be murky or yellow) just aren''t on point.

I see the pricing of E/VS as a contributing factor. Being priced out of range on E/VS is the motivator that gets folks to actually LOOK at Js, and once they see them, they realize that they aren''t "substandard" quality.

 

[Mara]

IMO the prices of an E VS2 forces people to look at other options and then realize that they don''t need that high color/clarity combo to be happy with their purchase. so yes the pricing is forcing people to explore other options and then they consciously decide they prefer the lower clarity/color combo. so in a way it''s additional education forced upon them that is showing them what i like to call ''the light''.

i would not actively look to purchase an E VS or anything for myself, but if someone threw one at me...i''d catch it.

 

[cflutist]

Date: 5/26/2005 8:04:40 PM
Author: Mara
IMO the prices of an E VS2 forces people to look at other options and then realize that they don't need that high color/clarity combo to be happy with their purchase. so yes the pricing is forcing people to explore other options and then they consciously decide they prefer the lower clarity/color combo. so in a way it's additional education forced upon them that is showing them what i like to call 'the light'.

i would not actively look to purchase an E VS or anything for myself, but if someone threw one at me...i'd catch it.

Pricing sure forced us to look at other options too. My previous stone was a 2.05 D-VS2. I would have loved the same color-clarity combo in a 3ct but was priced out of the market. Just checked the price stats today and that combo would be $60K, way more than we would be willing to spend. So I looked a other options too and ended up with F-SI1. But looking at the price stats a 4ct I-SI2 costs less than a 3 ct F-SI1. Some will choose the 4ct while some will choose the 3ct.

But I am like Mara too, if a dealer were to sell me a D-VS2 for the price of an F-SI1, I would take it in a heart beat (assuming that the cut was the same of course).

ETA: Just found an old price report from National Jeweler dated 11/21/96.

Back then a 2 ct D-VS2 was 17,840, 2 ct H-SI1 was 10,800 and 2 ct J-SI2 was 8040

By 11/19/97 the price had risen to
D-VS2 = 18,140, H-SI1 = 11,580, J-SI2 = 8320

By 3/22/99 the prices had fallen slightly
D-VS2 = 17,460, H-SI1 = 10,840, J-SI2 = 8200

By 3/30/05 big increase
D-VS2 = 25,102 H-SI1 = 15,070, J-SI2 = 7742

Don't shoot the messenger.

 

[Kaleigh]

Yes my ring is an E VVS2, could we buy that today, He*l no!!! If we were to go out tomorrow and buy an ering we would go for a nicely cut near colorless stone and lower clarity, and would''ve saved a ton. We did an upgrade and were lucky to have done this at the right time.

 

[afrodyt2000]

Date: 5/26/2005 8:24:09 PM
Author: cflutist

Date: 5/26/2005 8:04:40 PM

By 3/30/05 big increase

D-VS2 = 25,102 H-SI1 = 15,070, J-SI2 = 7742

Don't shoot the messenger.


Is the J-SI2 supposed to be 8742? else there's a price drop in that category.

 

[cflutist]

Nope, the chart says 3871/ct x 2 = 7742. Disclaimer says "based on asking price averages for GIA graded round diamonds" on Polygon's CertNet online trading system (this is something jewelers in the business use). In general, finer makes (e.g. better cuts) will command higher prices, as well at stones at the higher end of each weight range e.g. 2.93 cts vs 2.01 cts.

 

[Mara]

my J SI2 was about 4700/ct for the 1.5-2c size about 2 months ago...so 7700/ct would definitely be a big increase.

 

[cflutist]

Date: 5/26/2005 9:01:51 PM
Author: Mara
my J SI2 was about 4700/ct for the 1.5-2c size about 2 months ago...so 7700/ct would definitely be a big increase.

No, the chart says 3871 per carat, times 2 carats = 7742 total for an average cut J-SI2, GIA graded, 2 ct stone.

For 1.50 - 1.99, the chart says 3756 per carat for an average cut J-SI2, GIA graded stone. 3756 x 1.60 = 6009. Guess H&A adds a premium.

 

[noobie]

Date: 5/26/2005 7:41:12 PM
Author: aljdewey



I think that people *are* pleased with the quality that J/SI represents once they SEE them and realize that their preconceived notions (stones will be murky or yellow) just aren''t on point.

I see the pricing of E/VS as a contributing factor. Being priced out of range on E/VS is the motivator that gets folks to actually LOOK at Js, and once they see them, they realize that they aren''t ''substandard'' quality.

Not everyone. I bought a SI2 J after seeing pictures and reading the raves. I sent it back. I didn''t like the color. It''s a personal thing.

 

[DiamondExpert]

Don''t look for diamond prices to come down any time soon - perhaps not even in your lifetimes. The world demand is beginning to and will continue to far outstrip decreasing supply.

For example, http://www.professionaljeweler.com/archives/news/2005/052305story.html

Please don''t shoot this messenger!

 

[aljdewey]

Date: 5/26/2005 9:44:13 PM
Author: noobie

Date: 5/26/2005 7:41:12 PM
Author: aljdewey



I think that people *are* pleased with the quality that J/SI represents once they SEE them and realize that their preconceived notions (stones will be murky or yellow) just aren''t on point.

I see the pricing of E/VS as a contributing factor. Being priced out of range on E/VS is the motivator that gets folks to actually LOOK at Js, and once they see them, they realize that they aren''t ''substandard'' quality.

Not everyone. I bought a SI2 J after seeing pictures and reading the raves. I sent it back. I didn''t like the color. It''s a personal thing.

I know, noobie.....I know you bought the stones for the earrings in J and then didn''t stay with them.

But, you at least looked at them. And my comment wasn''t meant to suggest that everyone would be pleased with them......but a pretty big majority of folks who aren''t color sensitive do like them.

 

[Nicrez]

Well, the color sensitive are screwed. I agree with Noobie...

I saw the radiant cut I LOVED in a G and that disturbed me. Radiants as well are sieves of color, so in rounds where you can get away with it, you really can't get a J in a shaped stone without seeing color.

To me, I need an icy white stone, and have very keen eyes, so I had no choice... or shall I say my DF had no choice...

Sadly, when I upgrade (YEARS later) I will need to get a shaped stone, but have to stick to the same color area D or E because my eyes are accustomed to it, and I would find it a big trade down, even with size increase.

I would lower clarity to VS2, possibly a rare clean SI1, but again my love for diamonds has to do with the rarity of the stone and not just the size... so my stone at it's current size is rarer in it's color and clarity than a honker of a stone in a lower color and lower clarity, so that's something I truly appreciate, no matter what...

I don't forsee prices going down in the near future, so it looks like my DF and I will have to work a bit harder and longer for that upgrade...

 

[websailor]

Everybody makes value decisions in their life -- what do I get for $x. Obviously the larger $x is, the more flexibility you have....

The peoples personalities factor into this also. I.E., some only like rounds, some think a big diamond is too ostentatious, some can''t see themselves spending over $x for any diamond, etc.

I remember when I could fill the gas tank of my car for two dollars...today that won''t even buy one gallon of gas. But peoples salaries were a lot lower then too...I''d suspect if you factored in inflation, etc, that there has been some erosion in buying power, but not a huge amount. But this is very complex in my mind - I''m also factoring in that more people own their own homes now, have multiple cars, buy Starbucks coffe daily, etc....I have no doubt that you could make the statistics tell any story you want.

In the end, I think there will always be a range of choices that people will make when buying a diamond and they will find a way to spend what they individually want to for that choice. So some people will spend more $ for a D color stone, others will spend less $ for a J color stone - all based on the choices they are making in their individual lives.

To achieve one goal in their life (spend $x to get Y diamond), they may have to give up other things in their life (say those Starbucks coffees). Some people will be able to do this sucessfully, others will not.

Just my rambling two cents....

 

[Islandia]

I think part of the "problem" if you can call it that though is that diamonds are really still a luxury item and many people still view them as such. Most people are willing to make a few tradeoffs on a luxury item so that they can benefit more with the money at a later date.

When I was diamond shopping I kept thinking, well I could spend an extra $5000 now or invest it in an index fund matched to the S&P 500 at around 10% per year for 40 years (when I retire) and it would be $226k

Of course the same could be said for even picking my price point of $10k, but it just seemed like I would not be getting much more stone for $15k versus $10k (i.e. only one grade of clarity or one grade of color difference and the size would remain pretty constant).

 

[pqcollectibles]

Date: 5/26/2005 9:44:13 PM
Author: noobie

Date: 5/26/2005 7:41:12 PM
Author: aljdewey



I think that people *are* pleased with the quality that J/SI represents once they SEE them and realize that their preconceived notions (stones will be murky or yellow) just aren''t on point.

I see the pricing of E/VS as a contributing factor. Being priced out of range on E/VS is the motivator that gets folks to actually LOOK at Js, and once they see them, they realize that they aren''t ''substandard'' quality.

Not everyone. I bought a SI2 J after seeing pictures and reading the raves. I sent it back. I didn''t like the color. It''s a personal thing.

A lot depends on the diamond being considered too. I have a beautiful J that I am very happy with. I''ve discussed how white it appears with both Brian Gavin at WF and Jonathon at GOG. Brian said my diamond has a lot of contrast. Rhino thinks the contrast is a huge part of the reason my diamond faces up so white. But another thing I think is the color of the rough the diamond was cut from. I''ve seen pics of J''s and K''s on PS that appear very yellow or brown in the pics. I''ve seen other J''s live and in person that I noticed yellow in, but my diamond is neither yellow or brown. When held against a white piece of paper, my diamond appears blueish-grey in the body. Held up to light, I can "see" the body of the diamond but do not any yellow or brown color.

Maybe some of us were lucky when we selected our lower color diamonds. Maybe we found diamonds with enough hue saturation to merit the I/J/K rating without the obvious tints of yellow or brown.

 

[stujin]

I''m new to this thread and I am amazed at all of the wonderful information I see on here. I have a quick question to ask help on. I recently purchased a 1.51 J VS2 Ideal cut diamond. I was one of the ones that went to the store convinced I would never consider a J color, but after she brought it out next to an H and I I could not see the difference. Especially $1500 worth of difference. I just wanted to get everyones opinion on the diamond I purchased. It is being set in a 6 prong superbcert tiffany engagement setting. Here are the GIA report specs:

Shape and Cutting Style: Round Measurements: 7.35-7.47x4.59 mm Weight: 1.51 carat Proportions: Depth: 61.9 % Table: 57 % Girdle: Medium to Slightly thick Culet: NONE Finish: Polish: EXCELLENT Symmetry: EXCELLENT Clarity Grade: VS2 Color Grade: J Fluorescence: Strong blue

Also, any ideas on pricing of this ring. I paid right at $7,000 for the diamond locally. Do you think I got ripped off? I wasn''t for sure....I kind of made a fast decision since I am planning the engagement for this weekend. Thanks!

 

[perry]

I think the points on the overall budget - and what people want to put into a setting are valid.

People are indeed buying lessor grades of stones than before.

I just got a quote for a custom setting for a 3 stone ring for 1/4 carat RB side stones and a 3/4 carat range center stone. Aproximately $1600. Yet, my total budget has not much changed.

In my case, I already own the side stones.

On the other hand, I just unexpectedly spent an additional $5000 on other things, which does affect what I can spend at the time (not much) since that $5000 was kinda earmarked for the ring.

Of course - she has not yet said "yes" and I am not going to actually buy the center stone and have the ring built untill she does.

Perry

 

[Rank Amateur]

It seems that prices for the stones with the large demand (~$6k) have not gone up but the larger, smaller volume stones have jumped. Maybe it has more to do with how many cutters out there are shooting for high-turnover 1.0 ct stones rather than attempting to bring to market stones 2ct+.