True Diamond Wholesale Prices Rap/Idex % off.

[ilzho]

Hello:

I'm having a discussion with some jewelry friends about true wholesale diamond prices.
Some are indicating that 40% off of Rap is good.
Another says 30% off of Idex.

I thought I would get opinions from the experts, you!

What are your thoughts about a true diamond wholesale price list?

The other argument is a mark up % from that wholesale price to a retailer.

Any thoughts are appreciated.

 

[denverappraiser]

Define ‘wholesale’ please. Excuse me, 'true wholesale'.

Prices paid by dealers to their regular suppliers range from Rap-60% to well over Rap depending on the details of the stone to the details of the deal. One-off deals can be both higher and lower than that. It’s not consistent and the whole ‘Rap Trap’ is one of the biggest rabbit holes in the whole industry. Jewelers who buy based on the deepest discount from Rap are suckers. They may or may not be passing on the ‘discount’ to their customers but if they point at Rap as if it’s some sort of industry bible, they’re taking their customers for fools. It makes no difference if it’s because they’re fools themselves.

You're looking for what % retailers mark things up? As with the above, it's not all the same. Each store can charge whatever they want. Some stores ask a lot more for their time and skills and some deliver a lot more in terms of value. The cheap places are in the single digits and the dealer margin can be under the sales tax. The expensive ones are over 100%, particularly on select items.

 

[Dancing Fire]

please let me know where can i buy a well cut H&A GIA/AGS stone at 30% back of Rap...

 

[ilzho]

Hi:

Thanks for the reply.
Think of it this way:
If I'm a jewelry shop and buy 100 diamond rings from a vendor, I can weigh the ring and see how many grams it weighs and figure out the amount of gold in it.
With the diamond I know the size, clarity, cut, etc..., but I would like to know what my price range 'should' be. I can base it off of rap, but 50% off of rap, 20% off of rap??
Does this make sense.
I know there's not just one TRUE answer, but I would like to know if the vendor is giving me a 'fair' wholesale price or if I should shop many other vendors.

Thanks!!!

 

[Dancing Fire]

Hi:

Thanks for the reply.
Think of it this way:
If I'm a jewelry shop and buy 100 diamond rings from a vendor, I can weigh the ring and see how many grams it weighs and figure out the amount of gold in it.
With the diamond I know the size, clarity, cut, etc..., but I would like to know what my price range 'should' be. I can base it off of rap, but 50% off of rap, 20% off of rap??
Does this make sense.
I know there's not just one TRUE answer, but I would like to know if the vendor is giving me a 'fair' wholesale price or if I should shop many other vendors.

Thanks!!!

but do you know the cut quality? are these stones graded by GIA or AGS?

 

[Rockdiamond]

Part of the point Neil was making is that one ring purchased from a vendor, by a consumer, is not a "wholesale" purchase.
You can strip away all the things people sometimes choose to pay for, and find someone who sells offering no service whatsoever, and may offer a lower price.
But it's still a retail sale.

Another point he's made well- and I can reiterate- when a cutter or dealer calls me up with a stone that's got a larger discount than average, 999 times out of 1000 there's a darn good reason for it.
Gold is x$ for 24kt per ounce.
D/VS1 RBC is x$ per carat, unless it' got fluorescence, then it's x-5% or x-50%
There's so many variables if one is trying to play a numbers game without real knowledge of diamonds, and the market , the odds are against them.

 

[ilzho]

I agree with you.

These are not certed stones. As a caveat, I'm a G.G.
These are complete rings from a vendor that sells only to big box retailers.

So I assume that big box retail company selling to the consumer would have a cost analysis proposal sheet showing what the diamond is (Quality, etc) and what the price of that diamond is, the same for the metal, KW, weight and price etc....

So if I take that sheet and see that the vendor sent me 100 SI2, J, GD/GD, no flour, etc.. all weigh .46ct each, I should be able to reference the rap sheet or Idex and see that it is X% off of rap or Idex????

 

[denverappraiser]

No, your question doesn’t make sense. Mind you, I understand it, and I get asked it regularly. The problem is that it’s not a valid question.

Start with the database here as a learning exercise. Search for something popular, say 1.00-1.03/VS1/F/round. I’ll wait….

OK, there’s 1611 offers for sale from that particular search. Prices range from $4319 to $14519. All have the same Rap ($11,100) and all are being offered by highly price competitive dealers. Is the cheapest the best deal? It’s 61% back, and that’s retail. Is the most expensive a ripoff? That’s 30% over. I wouldn’t be surprised if it sells faster but that’s harder to watch. The path of maximizing the discount is going to land you the $4300 one and I GUARANTEE there are issues with that stone. I don’t know what they are, and they may be acceptable, but to suggest that the only difference is the discount from Rap is completely missing the issues. That’s why I call it the Rap Trap. You’ve got 1600 valid offers in front of you that range in price by more than a factor of 3 and you’re asking about a price sheet that doesn’t even CLAIM to be useful for this purpose.

 

[denverappraiser]

I agree with you.

These are not certed stones. As a caveat, I'm a G.G.
These are complete rings from a vendor that sells only to big box retailers.

So I assume that big box retail company selling to the consumer would have a cost analysis proposal sheet showing what the diamond is (Quality, etc) and what the price of that diamond is, the same for the metal, KW, weight and price etc....

So if I take that sheet and see that the vendor sent me 100 SI2, J, GD/GD, no flour, etc.. all weigh .46ct each, I should be able to reference the rap sheet or Idex and see that it is X% off of rap or Idex????

The big box stores tend to be very focused on certain kinds of goods. I1-I2, J-M, heavy makes that land just over the magic weight points. I'm sure you're right that the box guys are driven by accountants and I imagine they're paying on the order of 40 back for that sort of thing. Add to that the fact that the sellers call them SI2/I's and the 'discount' goes up considerably.

 

[ilzho]

I understand your points and they are all good.

I am wanting to know how Jewelry retail buyers figure out what a 'good' price is for their products they are buying from the vendors.

Do they actually sit and figure, the diamonds cost this, the metal cost this and I need 4000 of them for my stores.
Or do they let the vendor tell them what their wholesale price is and then both sides negotiate.

Maybe I'm thinking too much into this, but being on the inside, I realize all the vendors get their stones from different locations and dealers and I realize the mountings are made in different places, etc and certain vendors have factories, then taxes and shipping, etc......
I am just trying to see what the best way to buy is? Some vendors reference 20% off of rap as wholesale, which I think is bogus.
Just my opinion.

 

[denverappraiser]

Payment terms has more to do with it than Rap. Big boxes want a long time to pay and they want the right to return if it doesn't go. They want price locks so that they can get their advertising out without worry. They do tend to beat them up with 'cost plus' sort of demands but it's really more about what vendor-A goods look like compared to what vendor-B goods look like within the context of suppliers who are willing to deal with the business requirements. Supplyling Walmart and their ilk is a tough way to make a buck. That said, I'm not understanding how this applies to you. Is someone trying to sell you big box closeouts or returns at a supposed discount?

 

[ilzho]

Working as a contractor for quality control on goods and not understanding their (Vendor) pricing to the company. It's really none of my business
I think you're right it has to do with payment terms, etc....I can find similar goods that are cheaper. This company kinda got screwed when they bought these items from the vendor.
That's why I was asking about % off of rap, etc. Just trying to find a starting point of their pricing philosophy to retailers. Or the philosophy of the retail buyers.

 

[Rockdiamond]

I understand your points and they are all good.

I am wanting to know how Jewelry retail buyers figure out what a 'good' price is for their products they are buying from the vendors.

Do they actually sit and figure, the diamonds cost this, the metal cost this and I need 4000 of them for my stores.
Or do they let the vendor tell them what their wholesale price is and then both sides negotiate.

Maybe I'm thinking too much into this, but being on the inside, I realize all the vendors get their stones from different locations and dealers and I realize the mountings are made in different places, etc and certain vendors have factories, then taxes and shipping, etc......
I am just trying to see what the best way to buy is? Some vendors reference 20% off of rap as wholesale, which I think is bogus.
Just my opinion.

That is a good question.
It takes knowledge of the market
How much are .10ct G-H SI RBC diamonds?
I'd suggest that buying them is really the only way to find out. Once you start to actually buy, you get a feel for what the market is.
Sometimes a dealer might ask $1800, but you find other dealers claiming to offer the same grade stones for $900. You need knowledge of what G-H SI diamonds can and should look like to be able to negotiate and really find out what they go for

But if we're talking about larger goods, like 4/4 ( carat sizes) - but even down to half carat stones - the better ones get sent to GIA. Period.
With prices what they are, ain't no cutters selling "parcels" of stones that will yield far more if they were sent to GIA or AGSL.
They will sell parcels of less desirable stones. Stones that they know have issues. But if they're cutting rounds to EX cut grade, they're going to GIA. Well cut fancy shapes in high colors- either the sellers are charging an arm and a leg for non GIA goods, or they go to GIA

I think it's a difficult venture for anyone but a seasoned buyer.

 

[denverappraiser]

I think you're working from a false premise, namely that there's some sort of bottom line 'true' wholesale that they should be paying and anything beyond that is getting screwed. The big box business is chock full of bottom feeders and I'm not all that sympathetic to their issues but they're generally pretty savvy shoppers. Perhaps not as savvy as they think they are. They might be getting screwed, but the real issue is whether they're getting goods that they can actually sell with payment, delivery and return terms that they can clear through their accountants. It's often moe like a banking deal than a jewelry deal. That's what MBA's do. It's a good sign that they're hiring people on their side of the table to try and stay on top of the quality control. That can bite them hard. This too is a far bigger topic than the Rap discount on the materials.

 

[Karl_K]

The truly big players would not be negotiating on a 100 or 1000 lot anyway.
They are bought on contract, usually a year.
x number of stones of a certain grade over a year with specified delivery and payment dates and a big surge for the holidays for a certain price with a return policy.

 

[oldminer]

Iave an APP on my smartphone which works in conjunction with our firm's subscription to Rapaport. I can put in the outline, weight, color and clarity and it will give me the Rap price. Then I hit button #2 and it tells me the Average discount on Rapaport's list its xx% off the Rap price and also what the highest discount off the Rap sheet is, too. Now, this is very useful for a diamond guy and an appraiser, but it does not tell me how much any single diamond, with its many additional variables, is really worth. It gives me a clue, such as what the worst example is discounted and what average examples are discounted. It does not tell me what the finest stones are discounted or how much over Rap they might be, but it is a useful tool.

You have to understand the effect of fluorescence, the effects of various polish, symmetry grades, the effects of clouds, opens, girdle thickness, irregularities, graining, and several other items to really have some concept of wholesale on any particular diamond. So, it remains something of a mystery that no one can solve for consumers at a reasonable level without seeing the exact stone and its documentation.

You can look at a large group of diamonds of a given weight range, color/clarity combination offered for sale to a large chain store buyer and come up with a typical discount scenario, but any individual stone in the group might not fit the pattern properly. Price points are so important to major retailers that vendors throw whatever they can find at them hoping most of it will be accepted. The best bargains are not offered to price point shoppers, but to customers who deserve somewhat more humane treatment. The huge users beat up their suppliers to the point that relationships are always tenuous. It is a battle to the finish and not what a consumer can participate in.

 

[TitanCi]

If they're you're true friends, they'll give you 55.3692254% off Rap.