What is the price you should pay for your diamond.

[trichrome]

I'm a little bit fed up. I saw so many consumers who were
ripped off buy diamond sellers.
Remember that every diamond is usually trade according
to a price / carat established by Martin Rapaport. Color,
Size, Clarity are used to establish this price. Nothing
about cut. Stones are then sold with a certain discount on this price.
It can go up to 60%...... It depends on the cut , etc...
YOU are the end-buyer. You'll then buy
at the price that is the higher. So if you want to know if you got a
great deal, you have to know the Rap price, the cut and the trends
in the market. Obviously, if you're not in the market, a member
of Rapnet, or anything, you'll get ripped off, 100% sure. Do you
really think that your jeweller should make 1000$ on your stone
that you paid let's say 4000$....... ?!??!?!?

Best regards,
Trichrome.

 

[PoopEater]

Sorry, but that is the way a capatilist society works. If someone doesn't want to do the research and figure out what they should be paying, then I have no pity for them when they get 'ripped off'. It's like the old saying goes..."A fool and his money are soon parted."

 

[optimized]

In a sense, a sort of agree with our esteemed "brownivore," although I'm not quite as cutthroat in my attitude about it. I'd also slightly modify his quip and posit that "a fool and his money are lucky enough to have been together in the first place." The free market capitalist system sort of depends on sellers being able to set their own price, and buyers using their intelligence to find the value. The beauty of the system (usually) is that the existence of competition among all the sellers trying to capture sales will result in the industry as a whole tending to offer value. Unfortunately, with an industry that is wholly comprised of "one of a kind" items like diamonds, this system sees some strain and requires more vigilance on the part of the buyer to determine fair value.

While I found in my search that I truly enjoyed the learning and researching, I realize that researching a diamond purchase is often not a fun thing for people to do, but it's sort of a necessary evil in the free market system on which so many economies are based. This is where forums like this come in, and where the Internet as a place to learn and compare really shines. Diamond databases are plentiful, and a lot of the information required to make an informed decision is right at your fingertips, without the need to see a single Rap sheet.

I found in my search that Internet dealers come in all varieties, from expensive and uninformative, to value-oriented and comprehensive. The good vendors give loads of information that can be used for everything from actually buying a diamond online, to using prices and specs gleaned from the Internet as tools in negotiating a price with a local dealer. The research might not be fun for many, but it typically pays off in the end.

Although the Rapaport Report is a commonly used reference, it's worth noting that it doesn't actually "set the price" in the marketplace, but simply attempts to describe the market it covers. Also, since the Rap sheet exists for the industry (not the consumer), it is understandably geared toward the dealer and is designed to some extent to offer them a way to make their prices look better than "going market rates." You might think of it as akin to the "manufacturers suggested retail price" of the diamond business (a value that usually has no bearing on the "street price" of most merchandise). I realize this analogy is an over-simplification, but it'll do for our purposes. I've seen dealers, upon being asked what a certain type of special-order diamond would be, grab their Rap sheet and flip through to find a price, but in reality this is not remotely related to what they might actually pay their cutter/distributor, so isn't the "final word" on the issue.

Unfortunately, since the industry does in fact deal exclusively in "one of a kind" items like diamonds, it would be very difficult for any resource to be comprehensive in rating every conceivable combination of physical attributes possible in diamonds, so I'm afraid the Rap sheet price will never be a good indicator of the "real value" of a specific diamond, but it is still useful within the industry as a rough guide.

I personally didn't mind not knowing the Rap sheet price for diamonds in my criteria when I was shopping. I just canvassed every source of information and pricing I could find, compiled a fairly huge list of prices for stone within my criteria, and used those numbers as a guide for finding a "fair price" for my diamond. In the end, I think I did pretty well, and don't regret having not had the Rap sheet as a guide. It can be daunting, but with so many companies vying for consumer dollars there are definitely bargains to be found, and the Rap sheet isn't required to find them...

-Tim

 

[trichrome]

Of course not... since all these internet prices are based on it...
You know, your local jeweller is buying stones according to the Rap sheet..
Remember also that when a diamond is sold between traders, it is
usually part of a "lot". And in some lots, you can have "dogs".
These are the diamonds you want to avoid, even if they are 40% off Rap.
Also, if you have access to Rapnet, or Polygon or whatever, you'll see
that all diamonds are sold with a % off Rap. That's the way the
market is.

Best regards,

Trichrome.

 

[Rhino]

This is true trichrome.

While I dream of the day I can make $1000 off a 4k stone, if sufficient profit is not made on a stone how do you expect anyone to be in this business? Do you consider a person to be getting "ripped off" if a jeweler is making a profit on a diamond? Who is to determine whether you're being "ripped off" or if a fair profit is being made? This is where doing your homework comes into play and weighing your options. A store usually has to charge according to their overhead and the amount of goods they sell each month. If there is no overhead and service is little more than answering a phone call or 2 then of course ... low overhead, minimal investment & time = lower profits. More overhead, more investments in time, technologies, etc. = more value and usually more money. If you are dealing with an establishment that has been around a long time and offers service above and beyond the call of duty then it is up to you to weigh whether you want that added security/confidence and value. If you could give a hoot there are plenty of vendors (including myself who offers both options) who'll sell you a diamond at single digit % over cost. The difference many times is walking into your decision with half truths or very limited information vs what I would consider "the whole enchilada".

I've been in many parts of the world and I'll take capitalism anyday.

Peace,
Rhino

 

[Richard Sherwood]

-----------
Obviously, if you're not in the market, a member
of Rapnet, or anything, you'll get ripped off, 100% sure.
-----------

I would say this is a bit on the cynical side. The majority of jewelers are conscientious businessmen operating at a profit level which allows them to maintain their store, their staff, and make a living.

This is not a rip-off, but simply the cost of doing business. You encounter it in every business you walk into, whether it be a doctor, a plumber, or a retailer.

The example you gave of a jeweler making a $1000 profit on a $4000 sale is a 33.3% markup. Compare this to 100% markup you pay for a pizza, 300% markup for a pair of glasses, 700% markup for designer clothes and God knows how much markup for a doctor's visit.

Not too mention that all those items have no intrinsic value after purchase, while your diamond has a tangible asset value which is unmatched in the world of luxury items.

 

[Garry H (Cut Nut)]

Did it ever occur to you that evrything you eat and wear resulted in you getting 'ripped off'?

The greatest rip off of all time was Pepper from peppercorns grown in the far east. By the time they got bought and sold hundreds of times and arrived in Europe they were hundreds of times marked up. Pepper cost more than gold and was the main reason for the rise of the Dutch East Indies company and most of the worlds colonisation (including America which was found as a result of an attempt to find a quicker way to the 'spice islands'.

As the song say's "it's money makes the world go round".
Call it greed if you will, but in satisfying your own greed / lust / desire etc to adorn yourself or a lady with a diamond (or buy a meal in a restraunt), you are just perpetuating a rather old and natural part of human nature.

When did anyone ever sell anything for less than a buyer would pay?

 

[trichrome]

Let's see... Every dealer is usually buying diamonds as a pack.
It takes some time of course to choose them.
Then when the customer enters your office, you take maybe 30 minutes
to show him a couple of diamonds. Then you make 33% markup on the deal?
or 1000$ for half an hour work??

My office doesn't cost me 1000$ to heat you know, even if I'm in Canada.

As dealers, I think everyone should understand the point of view
of the potential clients.

Trichrome.

 

[Mara]

My two cents..diamonds/gems etc are all luxury items. They are not necessities in life. If you don't want to play the game, go mine your own diamond out of the earth, use your tools to cut them, etc..cheaper? Not really.

Also...I may be mistaken but I had heard that most above-board retailers don't make a huge markup on the stones themselves, but rather they make more money when it comes to the setting or similar. 33% is a decent profit..but nothing spectacular. I sell items on eBay sometimes for fun and will not purchase and sell anything that I know I cannot at least make 100% profit on. Why? Because its not worth the time for me to do it. These are not $4000 items but still. Everyone's idea of what their time is worth to them is different. As a consumer, of course you get the itches thinking someone is making $1k off you. But they have what you don't and you want it. Supply and demand?

 

[student]

If you knew someone would sell you a diamond for a bargain price, would you offer him a bit more to make the price 'fair'? I sure wouldn't.

If you arm yourself with information, you can do well. The internet tips the balance in favor of consumers. Here's a good substitute for the Rap sheet that I found online:

http://www.national-jeweler.com/nationaljeweler/business_resources/diamond_report_pdf.jsp

Also, remember that vendors pay more for well-cut diamonds just like consumers do, even though the Rap sheet just provides averages. You will find a wealth of information in the price stats and pricescope on this forum. If you do your research, you can know about as much about a diamond's market value as the vendor does. And to boot, if you do a little digging you can find out about the vendors' personal histories and rivalries with one another.

All they know about you is your e-mail address, and that you're likely to review them on a public forum. It's a fun game, and a safe one if you hire a good independent appraiser.

 

[aljdewey]

----------------
On 1/16/2003 12:45:30 PM trichrome wrote:
Let's see... Every dealer is usually buying diamonds as a pack.
It takes some time of course to choose them.
Then when the customer enters your office, you take maybe 30 minutes
to show him a couple of diamonds. Then you make 33% markup on the deal?
or 1000$ for half an hour work??

My office doesn't cost me 1000$ to heat you know, even if I'm in Canada.

As dealers, I think everyone should understand the point of view
of the potential clients.

Trichrome.----------------

I'm one of those "potential clients" whose point of view you're trying to preserve (which I appreciate), but I suspect you've perhaps oversimplified the process of the dealer. You left out the following:

After potential client sits with dealer for 30 minutes, he then shops to 24 other dealers, who all invest another half-hour a piece. Then, potential client comes to 66 internet boards asking whether or not he's getting screwed. After much angst and clapping by the masses over client's ultimate choice, he chooses ONE diamond from ONE dealer. The other 24 get BUPKIS. And this happens with regularity....just read these boards...."I was looking at diamonds from these 4 online vendors, and finally settled for X".

My point is, for the one potential client that does yield $1,000 for the half-hour's work, there have almost certainly been 24 other half-hours that the dealer worked just as hard at with other potential clients and got paid $0. As I see it, that means the dealer got paid $1,000 for 12.5 hrs work.

As I said, I'm a potential client. But I don't want to make the sale such an unsavory process for the dealer that I get minimal service and minimal help either. As a rule, smart shoppers will discover what is a "fair price" through comparison shopping.

Just my humble opinion.

 

[Richard Sherwood]

In addition, the jeweler/dealer has to pay for:

Rent
Inventory insurance
Liability insurance
Employee payroll
Advertising
Utilities
Telephone expenses
Fax machines
Computers
Inventory software
Gemological equipment
Gemological training
Continuing education
Trade show expenses
Travel expenses
Safe
Security expenses (surveillance cameras, tv, video recorder, etc, etc)
Certifications
Shipping
State taxes
Federal taxes
Occupational licenses
Bad debt expenses (bounced checks, rip-offs)
Collection expenses
Misc, misc, misc.

Then, in addition to all this, the jeweler/dealer needs to make enough profit to make a decent living.