Where are the price jumps?

[kenny]

We all know a 0.99 will sell for much less per carat than a 1.00 ct diamond.
0.5, 1.5, 2.0 ct are also well-known milestones but where are the other price jumps?

I got curious so I did searches on, and only on, Bluenile because they has a huge inventory, yes much of it virtual.
My reasoning is if diamond cutters shoot for milestone weights to maximize profits it stands to reason that there will be more of them for sale than stones 1 point under suspected milestone.
Where exactly ARE the milestones between the well-known obvious ones?

More data is always better so I my searches included ALL colors, All clarities, and ALL cut qualities, but only in rounds since it's the most popular shape.
The first search is how many 0.99s are for sale compared to 1.00 cts.
Results:
0.99: 22 rounds
1.00 1,387 rounds



Next I'll check some other weights, and post.

 

[kenny]

I'd love it if a vendor would just post where ALL of the per carat price jumps are.
But I understand that may be proprietary, and may perhaps vary form vendor to vendor.

FWIW here's some raw data to chew on and draw your own conclusions.
One thing that may affect the numbers is 0.99 may fly off the shelf faster, but then again so may 1.00s.

FIrst number is weight and second number is the number of rounds for sale.
See the above post for my methodology.

0.24 262
0.25 206 (That's a soup rise!)

0.29 103
0.30 5,006

0.39 154
0.40 3,196

0.49 22
0.50 375

0.59 179
0.60 1,536

0.69 16
0.70 3,144

0.74 264
0.75 541

0.79 77
0.80 1,486

0.89 11
0.90 2,015

0.99 22
1.00 1,387

1.09 179
1.10 215

1.19 75
1.20 479

1.24 185
1.25 239

 

[kenny]

1.29 70
1.30 314

1.39 21
1.40 199

1.49 5
1.50 632

1.59 71
1.60 106

1.69 16
1.70 263

1.74 52
1.75 47 (What could explain this soup rise?)

1.79 18
1.80 95

1.89 4
1.90 36

1.99 3
2.00 214

 

[yennyfire]

That's really fascinating Kenny! Thanks for taking the time to pull the data together. I actually makes sense if you think about it. People (non PSers) always go into a store and say "I want a 1.0 or a 1.5 ct. round stone" not realizing that they could probably get a much better value on a .98/.99 stone or a 1.45/1.48 stone. Can we keep this little revelation to ourselves???

 

[Christina...]

Wow, that's a lot of work Kenny! If I was feeling ambitious I would go back and post the corresponding prices for the weights. Of course that would only work if they had a (for example) H VS1 for each of the increments that you posted.

 

[kenny]

Here are the 2 to 3 carat data.
I won't bother with over 3 ct since so few stones are available.

2.09 41
2.10 53

2.19 16
2.20 36

2.24 31
2.25 22 (Another soup rise - perhaps full 2 1/4s just fly off the shelf faster ??? )

2.29 21
2.30 22

2.39 17
2.40 49

2.49 5
2.50 34

2.59 9
2.60 9

2.69 1
2.70 12

2.74 4
2.75 2 (Soup rise again)

2.79 3
2.80 3

2.89 0
2.90 2

2.99 0
3.00 49

 

[kenny]

That's really fascinating Kenny! Thanks for taking the time to pull the data together. I actually makes sense if you think about it. People (non PSers) always go into a store and say "I want a 1.0 or a 1.5 ct. round stone" not realizing that they could probably get a much better value on a .98/.99 stone or a 1.45/1.48 stone. Can we keep this little revelation to ourselves???

True but as we see, there are just very few 0.99s for sale.

 

[fridays_child]

Great post!

 

[kenny]

In summary, I'm guessing there are more likely to be per carat price jumps where there are the largest differences in availability of diamonds that vary by one point.

On the other hand we see some prominent milestones exhibit smaller differences, perhaps because of demand for the full milestone.
There are more 0.24s for sale than 0.25s, also true with 2.24s and 2.25s.

This reasoning is all purely speculation on Kenny's part.
I'd love to hear your thoughts and theories, better yet, facts from pros.

 

[TravelingGal]

I'm terrible at data analysis, but just wanted to say this is fun, and thanks for taking the time.

 

[kenny]

I'm terrible at data analysis, but just wanted to say this is fun, and thanks for taking the time.

Well, maybe if you'd stop banging your head against the wall you'd be better at data analysis.

 

[TravelingGal]

I'm terrible at data analysis, but just wanted to say this is fun, and thanks for taking the time.

Well, maybe if you'd stop banging your head against the wall you'd be better at data analysis.

Obviously. I'm so dazed, I apparently don't even notice that the holidays are long gone...

 

[kenny]

Holidays have been gone for daze and daze.

 

[kenny]

This pretty much says it all ... bigger is better to most shoppers.

0.99 22
1.00 1,387

1.99 3
2.00 214

2.99 0
3.00 49

In 10 years when the Internet has educated many more customers on the importance of good cut I'll bet these ratios will shrink.
More rough will be cut for optimum light performance than just for weight retention.

 

[diagem]

This pretty much says it all ... bigger is better to most shoppers.

0.99 22
1.00 1,387

1.99 3
2.00 214

2.99 0
3.00 49

In 10 years when the Internet has educated many more customers on the importance of good cut I'll bet these ratios will shrink.
More rough will be cut for optimum light performance than just for weight retention.

Interesting Kenny,
You are correct Kenny, the ratios will shrink together with current price disparity.
In the smaller sizes (0.24-0.25ct), those are usualy sorted based on groupings. (eg 0.23-0.27 are considered 1/4's) So cutters will attempt reaching group borders vs single weight numbers.

It is interesting seeing cutter habits.

 

[denverappraiser]

For most dealers, the common per carat price breaks are:

0.23
0.30
0.40
0.50
0.70
0.90
1.00
1.50
2.00
3.00
4.00
5.00
6.00
etc.

It's a tricky question. As you point out, 0.99's are theoretically a fair amount cheaper per carat than similar 1.00's but they are vastly less available, largely for this reason. The ones you find will be lacking in other areas, usually cutting. Indeed, the usual reasons you'll find one is that the cutter screwed up in their attempt to get a carater for whatever reason or they had a carater, it got damaged and repaired and the final stone is now a little less. Cutters who make a habit of the former are former cutters so you don't see a lot of that and the later is a pretty specialized situation. I think you'll find a GIA-xxx 0.99 is going to cost about the same per carat as an xxx 1.00, if by some bit of luck you manage find one.

 

[texaskj]

kenny, this kind of ties in with DF's thread from last week.
[URL='https://www.pricescope.com/community/threads/a-warning-for-newbies-please-dont-buy-a-rb-stone.174194/']https://www.pricescope.com/community/threads/a-warning-for-newbies-please-dont-buy-a-rb-stone.174194/[/URL]
People get so wrapped up in carat weight.
Fascinating stuff, by the way.

 

[justginger]

Great legwork, Kenny! As you stated at the beginning, a difference was expected, but the actual numbers were, at times, far more than I expected. Very interesting to see as an amalgamation.

 

[Paul-Antwerp]

Great research, Kenny. These figures are an eye-opener, aren't they?

Since rough currently is relatively expensive compared to the resulting polished stones, we are very active recently in purchasing stones from other productions to be re-cut to our cut-quality. It really is annoying to see that we cannot even look at close to 90% of stones, simply because their dimensions would reduce the stone one, sometimes 2 weight-classes.

It gives a clear indication of true value-for-money, mind you.

Live long,

 

[Texas Leaguer]

Kenny,
Teachers must have loved you in school. How much easier does it get than when a student answers his own question!

As your research illustrates there are many "magic marks" along the size continuum. And as a couple of folks already pointed out, it is a mistake for a consumer to place too much emphasis on carat weight in shopping for a diamond.

One big reason for that is that the "theoretical" savings in staying just under a magic mark has been negated by market forces. It is much better to analyze the attributes of the diamond independant of it's weight.

The magic marks are somewhat of an artificial creation. Diamond rarity in terms of increasing size is real and is a continuum rather than a set of stops. The pricing system that has come to be highly influential in the industry uses stops, which in turn impacts trading practices which in turn impacts cutting practices!

Buyer psycology plays a big part as well. Most people would prefer "a full carat" rather than "almost a carat" pushing demand higher at the most common psycological threshholds.

Higher demand at certain points creates a calculus for cutters that each one handles differently depending on his business model and clientele. Most cutters will err on the side of weight retention in order to take advantage of those general market forces. A few cutters such as Paul might cut an ideal .99 rather than compromising on performance to get the 1.00. But they still have to be mindful of the larger market when buying rough (or recutting) and planning production.

I think it is safe to say that folks reading this forum are not nearly as likely to be swayed by a carat weight number when choosing a diamond, and that is a good thing.

 

[Rockdiamond]

That's one of the most salient use of statistics I've seen Kenny- fantastic stuff.

In the Fancy Colors, there's going to be far less of a pool of data, but the differences in price are far more influenced by other factors. So we're likely to see a lot more .99ct and 1.49ct stones relative to what we'll see in colorless.

 

[diamondseeker2006]

When I was recently looking at the 1.5 range, I saw that the ideal cut 1.4's were about the same price per carat as a 1.5. That was helpful because I could not worry about staying under the 1.5 mark! I've noticed big jumps between .65 and .70, though. So in that case, I'd stay under .70 or go higher than .70 to make the price jump worth it.

 

[Paul-Antwerp]

Kenny,
Teachers must have loved you in school. How much easier does it get than when a student answers his own question!

As your research illustrates there are many "magic marks" along the size continuum. And as a couple of folks already pointed out, it is a mistake for a consumer to place too much emphasis on carat weight in shopping for a diamond.

One big reason for that is that the "theoretical" savings in staying just under a magic mark has been negated by market forces. It is much better to analyze the attributes of the diamond independant of it's weight.

The magic marks are somewhat of an artificial creation. Diamond rarity in terms of increasing size is real and is a continuum rather than a set of stops. The pricing system that has come to be highly influential in the industry uses stops, which in turn impacts trading practices which in turn impacts cutting practices!

Buyer psycology plays a big part as well. Most people would prefer "a full carat" rather than "almost a carat" pushing demand higher at the most common psycological threshholds.

Higher demand at certain points creates a calculus for cutters that each one handles differently depending on his business model and clientele. Most cutters will err on the side of weight retention in order to take advantage of those general market forces. A few cutters such as Paul might cut an ideal .99 rather than compromising on performance to get the 1.00. But they still have to be mindful of the larger market when buying rough (or recutting) and planning production.

I think it is safe to say that folks reading this forum are not nearly as likely to be swayed by a carat weight number when choosing a diamond, and that is a good thing.

Hi Bryan,

I just wanted to correct a misconception, highlighted in red above.

The thing is, generally, when I am faced that will not make the magic weight in our quality, I make the following calculation.

1. Does the final cost of that smaller stone still allow the stone to be sold at a price, that can be defended, most importantly can be made?

2. If the answer is yes to the above, we purchase, if not, it depends on whether we already own the stone?

3. Are we still in the purchasing-process, we will not buy that stone. Do we already own it as part of a bigger purchase, we will sell the stone to another party, generally specialised in another cut-quality.

In other words, I value the stone on the basis of what we can sell it for. If that is more than or the same as the seller wants, we can buy, if it is less, we have to move on. In that sense, when we are looking to buy on the Antwerp-market now, we move on in close to 90% of the cases.

Live long,

 

[Dreamer_D]

Good job Kenny!

Unlike TGal I have not been banging my head against the wall and do data analysis for a living, so I wanted to make a small point for the readers.

Without inputting all the raw data, or drawing multiple sampels from different sources or points in time, I can't give a definite answer, but I want to remind people that it is likely some of the "differences" in availability at junction points may not be *statistically significant* or generalizable to the market as a whole. Remember this is just one sampling of available stones, albeit a very good one! Basically, this means that although two different carat weights may seem to differ in availability, they may not actually differ in reality; your sample might just randomly differ. A rule of thumb would be to just say to yourself when looking at the data that the smaller differences in availabilty between two groups are likely "random" and not "true". For example, the difference in availability between 0.99 and 1.00 ct is so huge that it seems likely that there are trule more diamonds available at the 1.00ct mark in the diamond inventory as a whole. In contrast, the difference between 1.24ct and 1.25ct is so small that it is possible that this is just a random difference and does not represent a true differenence in availablility in the diamond inventory as a whole.

 

[denverappraiser]

Kenny’s observations are basically correct and well supported by the statistics. What to conclude from that is a slightly tricky question and I think the comments from Paul and Bryan above are important. There are several important steps that a diamond takes on the path from mine to finger.

#1 The mine. Miners get whatever God put there, or possibly less. They can’t get bigger ones if that what sells better, they can’t improve clarity or color. They get what they get and they sell it for as much as they can.

#2 The cutting house. The miners sell their product in a highly competitive auction sort of environment to the cutters. They take their money and go dig some more. The job of the cutters is to take the stone and maximize MONEY. There’s some overlap with maximizing beauty, or weight, or whatever but they are not the same thing. Some stones are well suited for rounds, some make good princesses or hearts or whatever. Some will end up ‘ideal’ cuts, some will be cut for weight or spread or whatever. Some will get treated and some won’t. Actually, most will end up in drill bits and such. This decision is a critical job at the cutting house and if they screw it up they’re done. It is highly competitive, highly risky, and extremely stressful. It’s worth noting that all a cutter can do is subtract. Hopefully they are improving something else through their work but it’s a one-way trip. They pick stones, plan them out and live with the plan. If all goes well they make some money at it and can repeat the process. If not, they can always find work doing something else.

#3 The dealer. The cutter makes whatever they can out of what they buy based on what they think will sell the best for them and offer it in the market. The dealers include it in their line or not as they wish. Not all dealers are the same in terms of what they do well with or how they promote things but they all are the same in one regard. They like things that sell well. THAT’S the attribute they want to include in their product mix. Some do well with super-ideal type VVS things and others do well with enhanced I2 2 caraters. These aren’t usually the same stores but it’s a big world and there’s room for lots of different styles. They get pedigrees to support their own marketing style and they choose labs that offer the sort of information they want to use in their own marketing. Stones don't come out of the ground branded by GIA or XYZ, this is a decision made by the cutter or dealer.

#4 The consumer. Consumers tend to come at it from the other direction. They decide what they want and then they go shopping for it. They pick out a dealer that suits them well and who has what they want. In the end, that’s who gets the sale and that’s who gets paid. Everyone else waits for the next guy who presumably wants something a little different. Consumer demand is what’s driving this business of weight categories. People perceive a 1.00 as worth more than a 0.99; they’re willing to pay more to get it; and that in turn means that it *IS* worth more. Some other consumer is going to be willing to pay more for better cut but smaller stones. Again, it’s a big world and not everyone approaches it the same way but the cutter/dealer combination is going to try and route each stone towards the path that pays the best and/or sells the fastest. That’s what they do. That’s what they’re SUPPOSED to do. It’s all good.

 

[Paul-Antwerp]

The most important price-jumps are at the following weights, and are supported by Rapaport making them separate size-categories:

0.50
0.70
0.90
1.00
1.50
2.00
...

Aside from that, the trade generally considers the following also to be important jumps:

0.80
1.20
1.70

It is important to understand these jumps for two reasons:

- Consumers not 'blinded' by the carat-weight as such, could find better deals just below a weight where the price jumps up. However, this is tricky, because of the low availability in general of such stones.
- From a value-perspective, a stone just above such a weight could be less valuable in future. With cut-grading constantly evolving as well as understanding of swindling, the trick that made a stone finish at 1.00 (for instance) could be unacceptable in future, and when the consumer (or his offspring) want to sell it back to the trade, it will be valued as a 0.90-category, sometimes even a 0.80. It is an aspect, often neglected at the time of purchase.

Live long,

 

[Texas Leaguer]

The discussion Kenny started is very interesting because it starts to reveal the domino effects and the interrelationships involved in the market. Neil's common sense overview along with Paul's insider perspectives illustrate the complex and nerve racking calculations along the chain, all steeped in uncertainty and risk.

In reading this thread and thinking about it, I can't help but think how lucky consumers are that do their homework and end up getting a competitive deal on a really fine diamond. They cross the swamp without even getting their feet wet!

Another thought that I can't escape, is how some of the dynamics involved are essentially "the tail wagging the dog". Marketing messages leading most consumers to believe bigger is better, rap pricing that is not as much a reflection of transaction prices in the trade as it is a driver of prices, lab reports with incomplete (and therefore sometimes misleading) cut quality information that many cutters cut to, and again rap pricing that does not keep up with reality causing cutters to not be able to make certain shapes and sizes because of the economic considerations noted in this discussion.

Some have commented that information and education will tend to bring more rationality to the market and thereby make it better. And it clearly is having that effect- you see alot more GIA Triple Ex in the market today. But we have so far to go before more than a small minority of roughs that are available are processed into the best possible gems for the consumer. This is a dog with one really strong tail!

 

[ChrisES]

Great work, Kenny. I'm glad that our conversation last week has led to such a fascinating thread!

 

[stargurl78]

Good job Kenny!

Unlike TGal I have not been banging my head against the wall and do data analysis for a living, so I wanted to make a small point for the readers.

Without inputting all the raw data, or drawing multiple sampels from different sources or points in time, I can't give a definite answer, but I want to remind people that it is likely some of the "differences" in availability at junction points may not be *statistically significant* or generalizable to the market as a whole. Remember this is just one sampling of available stones, albeit a very good one! Basically, this means that although two different carat weights may seem to differ in availability, they may not actually differ in reality; your sample might just randomly differ. A rule of thumb would be to just say to yourself when looking at the data that the smaller differences in availabilty between two groups are likely "random" and not "true". For example, the difference in availability between 0.99 and 1.00 ct is so huge that it seems likely that there are trule more diamonds available at the 1.00ct mark in the diamond inventory as a whole. In contrast, the difference between 1.24ct and 1.25ct is so small that it is possible that this is just a random difference and does not represent a true differenence in availablility in the diamond inventory as a whole.

Dreamer, isn't it normally true that as long as your sample contains at least 30 observations, it is *usually* fairly representative of the whole? So I would think that even though its just one sample, Kenny's observations may be likely to hold true? However, it could be true that this sample does randomly differ.

(Note that I do not do data analysis for a living and have only taken a few classes recently so I am sure you have tons more knowledge on this matter. Just thought I would ask for the sake of the discussion... and because I'm a bit of a nerd and I'm curious )

 

[Paul-Antwerp]

The discussion Kenny started is very interesting because it starts to reveal the domino effects and the interrelationships involved in the market. Neil's common sense overview along with Paul's insider perspectives illustrate the complex and nerve racking calculations along the chain, all steeped in uncertainty and risk.

In reading this thread and thinking about it, I can't help but think how lucky consumers are that do their homework and end up getting a competitive deal on a really fine diamond. They cross the swamp without even getting their feet wet!

Another thought that I can't escape, is how some of the dynamics involved are essentially "the tail wagging the dog". Marketing messages leading most consumers to believe bigger is better, rap pricing that is not as much a reflection of transaction prices in the trade as it is a driver of prices, lab reports with incomplete (and therefore sometimes misleading) cut quality information that many cutters cut to, and again rap pricing that does not keep up with reality causing cutters to not be able to make certain shapes and sizes because of the economic considerations noted in this discussion.

Some have commented that information and education will tend to bring more rationality to the market and thereby make it better. And it clearly is having that effect- you see alot more GIA Triple Ex in the market today. But we have so far to go before more than a small minority of roughs that are available are processed into the best possible gems for the consumer. This is a dog with one really strong tail!

I agree with you, Bryan, that a lot of this is the tail wagging the dog, and I also think that over time, with more and better information becoming available faster and faster, the dog will be less and less wagged by the tail (is this a correct way of putting it?).

In that sense, it is certainly true that consumers doing their homework have a higher chance of getting a really fine diamond at a great value-for-money. It is an extremely fine line however between getting the best value-for-money and getting a great diamond at a great-price-at-first-sight but one that is not retaining its value with slightly deeper research. I think that that is the missing link in vendor-advice and in consumer-education.

Live long,