Which is the best way to price diamonds for selling retail?

[Urpiyazz]

Dear friends,

I own a small jewelry business in Peru and I'm starting to offer diamond rings. Local costumers prefer small stones from 0.15 ct to 0.60 ct, being 0.25 ct to 0.30 ct the ones they request the most. What tips can you give me for estimating the retail prices? What's the price difference from point to point, clarity grade to another and color grades? I have loose stones from 0.15 ct to 0.29 ct and certified (HRD, GIA, IGI, EGL) from 0.30 ct to 0.60 ct.

Any tip you can give me will be great.

Thanks in advance for your help.

Regards,

 

[John P]

Re: Which is the best way to price diamonds for selling reta

Welcome to Pricescope.

The short answer? I suggest you base your retail prices on your total cost for the diamond (sourcing, transit, insurance, stocking/setting etc.) plus a reasonable margin to reflect your value-adds and help put food on your table. If you're experienced in selling jewelry you probably have a basis for this already with your existing pieces.

Determining value in the way you asked involves two components: Determining B2B cost (what you pay the supplier) and your retail sell-for price.

When determining your B2B cost there are trade guides which many refer-to. I am sure you've heard of Rapaport and IDEX. These are good to know, but do be aware that there are many variables when using them: For example, imagine that you buy three round diamonds. All are 0.50 carat J SI1s. Since "Rap" says a reasonable B2B price for 0.50 J SI1 is (fictional) 100 ~ you pay 300 to get all three. Now you want to sell them for 105 apiece. But looking closer, the first was graded by a soft lab and it's two color grades lower than J so no one will buy it for 105 (you should have bought it for 80)... The second was cut with the diameter of a 0.44ct diamond and even though it weighs 0.50ct it looks visibly smaller so no one will buy it for 105 (you should have bought it for 90)... The third is a superideal H&A diamond that is completely eye-clean - which commands a premium - and is both GIA EX and AGS0 - which commands a premium - so you sold it quickly for 105 but you should have asked more if you wanted to replace it with like-kind in the next purchase.

So, clearly, one of the most important things is to deal with fair suppliers. This is critical. If you're good to them you'll get good terms. Then you can return to my short story and base your pricing to consumers on your own cost with a reasonable margin.

That's really the sell-for formula, to me. You can always do research if there are other sellers in your area. Be sure you're able to compete with the going rates within reason, or that you have a value-add which gives you an advantage. If there are no other sellers in your area you have a great opportunity to earn a killer reputation if you buy and sell wisely and fairly.

Something else you might consider is joining an online industry community. Polygon.net is a nice example of a group of nice folks from all sectors in the D&J business who help each other with questions - and do a lot of trade together: http://www.polygon.net

Cheers,