You must have often wondered why the prices of diamonds look baffling. A one carat diamond can carry a different price tag in different stores. One should bear in mind that no two diamonds are alike and hence, you may not necessarily come across the same price range everywhere. Since for most people budget is a constraint when they shop for diamond, it is essential to understand the key factors that influence the price of it. This can convince them that the diamond they are buying is worth every penny.

Let us take a peek into some of the most important factors that influence the value of a diamond:

1)      Color: A slight difference in color of a diamond can drastically affect its price. The value of two diamonds of the same cut, clarity or weight can vary depending on the color. Needless to say diamonds come in quite a range of colors that are classified on a scale of D to Z. Those in the category of D-F are termed colorless diamonds and are comparatively the most expensive. However, even within this range, D category diamonds are considered absolutely colorless and are more expensive than diamonds under F category. F category diamonds can be around 15% less in price than D category diamonds though to the naked eye the diamonds may look the same. In short, the nearer a diamond gets to D from Z, the more expensive its price per-carat and the further away it moves from D towards Z, the lower the price per carat.

2)      Cut: Cut is widely considered to be the most important factor that affects the value of a diamond. The cut does not refer to the shape of a diamond, but on how well it has been cut and shaped. Cuts are graded as Ideal, Very Good, Good, Fair or Poor. Only an ideally cut diamond can reflect all the light that enters through its top. An improperly cut diamond will exit the light from the bottom or side of the stone and cause a loss of ‘sparkle’. The price of diamonds drops to a great extent with poorly cut ones. However, it is not recommended to make any compromise here just for the sake of getting a diamond in less price. Shapes apart from the round brilliant are called fancy shapes or fancies where the best known ones are marquise, pear, heart, oval, princess, emerald cut etc.

3)      Carat: Carat refers not to the size but the weight of the stone. The weight of a diamond is considered to have a major impact on the price. The larger the stone, the rarer it is and hence, the price of one 2 carat diamond will be more than what the total cost will amount to of two 1 carat diamonds of the same type. It is to be noted that the size is measured in millimeters. A 1 carat diamond is said to typically have a metric weight of 0.02grams. An interesting fact to keep in mind here is the prices of diamond change dramatically with every half-carat intervals. Though there is not much difference in weight between a 0.9 carat diamond and a 1 carat diamond, yet there is a huge difference in price. On the other hand the price difference is less severe between a diamond of 1 carat and 1.1 carat. This difference is due to the prestige a ‘whole carat’ diamond possesses.

4)      Clarity: Clarity refers to the number of ‘inclusions’ that are present inside a diamond. Since diamonds are formed through extreme heat and pressure, it is difficult to come across a diamond that does not have any inclusions. Inclusions are nothing but internal features that includes trace minerals, scratches, crystals or any other tiny features. Diamonds also have surface irregularities known as blemishes which includes scratches and nicks on the surface.  According to many experts these inclusions and blemishes have the least influence on the appearance of a diamond and hence, the value is not much affected by clarity. Diamonds with the least inclusions and blemishes receive the highest clarity grades. Clarity is classified into: FL, IF, VVSI1, VVSI2, VSI1, VSI2, SI1, SI2, I1>I3 of which FL and IF are flawless with no imperfections and I1>I3 have inclusions that are very much visible to the naked eye.

5)      Shapes: A round shaped diamond, also identified as brilliant cut, is widely the most popular shape and the most expensive. The reason behind its high price is due to the fact that a round shaped diamond entails more time and skill in its production. Moreover, many rough diamonds are wasted in the process of cutting it. The next in the line of popularity is the princess cut diamonds. Since they involve less waste during the cutting process, they are cheaper per carat.

Though cut, color, carat, clarity and shapes are the most important, other factors like market supply and demand, production limitations and capacity and various macro-economic factors also play a major role in determining the value of a diamond.

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Posted by Roy Izakov.
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