Everyone knows that diamonds are expensive— but why is that? It’s easy to want to point to a single factor that makes diamonds expensive. However, the truth is more complex than that.
In general, there are three things that affect diamond price: rarity, desirability, and production cost. Then, there are a number of finer details within each category that affect diamond price. In this post, we’ll be taking a closer look at all these details in order to dissect why diamonds are an expensive gemstone and why certain diamonds are more expensive than others.
Before we dive into our guide to the factors of diamond price, we want to clarify that we’ll be talking mostly about colorless diamonds in this post. Diamonds come in every color of the rainbow. But when people talk about the price of diamonds without using a qualifier, they’re usually referring to the cost of colorless diamonds, also sometimes called white diamonds. It’s important to make this distinction because colorless diamonds and colored diamonds are priced quite differently. We’ll talk a bit about why that is in our first section.
With that said, let’s dive into our closer look at diamond pricing. We’ll start by examining the most misunderstood element of diamond pricing: diamond rarity.
People often say that diamonds are expensive because they’re rare, but that’s not always true. You may also hear people say that diamonds aren’t rare at all, which also isn’t exactly true. So, what’s the truth about diamond rarity?
Generally, diamonds aren’t particularly rare. However, jewelry quality diamonds with higher carat weights are very rare. According to the Gemological Institute of America (GIA), mineworkers need to process around a ton of rock until they find a diamond gem rough that weighs half a carat and can be cut into a quarter carat diamond. And, on average, they need to process around 100,000 tons to find a rough diamond gemstone that could be cut into a 1 carat, D color (completely colorless), flawless diamond.
So, gemstone quality colorless diamonds are rare. However, high quality diamonds aren’t the rarest precious stones. There are other gemstones that are more rare than gem quality diamonds, yet are still less expensive than gem quality diamonds. Why? Because rarity isn’t the only factor that determines diamond price. And, arguably, it’s not even the most influential factor in colorless diamond price.
Note that while rarity isn’t the biggest factor in colorless diamond price, it’s a huge factor in fancy color diamond price. Colored diamonds, such as pink diamonds and blue diamonds, are among the most rare gemstones in the world. As such, colored diamonds are in extremely short supply, which certainly affects their extremely high price tags.
Diamond Production Cost
If you’re not in the diamond industry or jewelry industry, you may not know that there’s a high production cost attached to the diamonds you can find in a jewelry store. The cost of mining a diamond is included in the final price of a diamond, as is the cost of cutting it. Depending on the skill of the diamond cutter and how challenging a diamond is to cut, cutting and polishing a rough diamond can be pricey. Losing a substantial amount of rough diamond waste during processing can also up the cost of a diamond. That’s one of the reasons round brilliant cut diamonds are more expensive than other shapes. You lose a high amount of rough diamond when creating a round diamond.
There are manufacturing costs associated with creating a polished and cut diamond, but the cost of getting a faceted diamond to consumers doesn’t stop there. A diamond also needs a grading from a gemologist who can provide an objective record of its Four Cs. Without a grading report that gives a buyer proof of a diamond’s carat weight, color grade, cut grade, and clarity grade, the diamond is unlikely to sell. Then, once a diamond has been graded, it can be set into a piece of jewelry by a jeweler or set aside to be sold loose. Either way, the retailer that sells that diamond to you, the consumer, needs to make a profit, which also adds to the cost of the diamond.
Our third and final factor, desirability, probably has the biggest impact on the price of a diamond. People simply adore diamonds and, naturally, the high demand for diamonds makes them more expensive.
A common myth about diamonds is that they only became popular due to marketing in the 20th century. However, that’s far from true. Humans have loved and coveted diamonds for hundreds, if not thousands of years. We know that diamonds were traded at least as far back as the 4th century, when Indian diamonds were first sold in Europe. By the 15th century, diamonds were highly desired among European royalty and nobility, who couldn’t get enough of these rare gems.
Before the 1800s, only the ultra wealthy could afford to buy diamonds, which were exceedingly rare for most of human history. But after new diamond mines were discovered in South Africa in the 1860s, the world’s supply of diamonds increased. After this, there were finally enough diamonds for the middle class to take part in buying and wearing diamond gemstones.
While 20th-century marketing did not spark humanity’s love for diamonds, we’d be remiss if we didn’t point out that it certainly helped it. And a specific DeBeers marketing campaign proclaiming that “a diamond is forever” certainly helped diamond engagement rings become the most popular engagement ring style. Before this DeBeers campaign debuted in 1947, sapphire engagement rings were actually the more popular option. Yet, ever since this campaign, diamonds have reigned supreme as the most popular center stone choice for engagement rings. Other campaigns of the time also bolstered the popularity of diamond jewelry in the 1940s and 1950s, and the messages in them endure to this day. People still think of diamonds as being “forever” and a “girl’s best friend,” and diamonds continue to be the most in-demand gemstone for engagement rings and fine jewelry alike.
Final Thoughts: Are Diamonds Worth Their High Price?
Ultimately, whether or not you think a diamond is worth a high price is entirely up to you. Many people find diamonds beautiful, desirable, and valuable enough to justify their price tag. If you don’t feel the same way, you can always explore other options until you find the gemstone that’s right for you.