NO MATTER WHO you are, where your store is, or how closely you guard your margins, you should be making more money on diamonds. Why? Because no jeweler in the world charges nearly enough for this amazing gemstone. Customers who are agonizing over spending several thousand dollars on a diamond need to understand this. And it’s your job to help them.
In my next two issues, I will give you six reasons that diamonds are ridiculously underpriced. Copy these two articles and make them required reading for every sales associate whoever works in your store. (The information I am about to share with you is compiled from sources including the GIA, the AGS, and DeBeers, as well as my own research … so you can take it to the bank.)
Rarity
Eighty percent of all diamonds mined are industrial quality. Of the remaining 20% that are gem-quality, it takes one million to obtain a single 1-carat diamond. It takes five million to get one 2-carat diamond. Think of it … a thousand piles of diamonds, each pile with a thousand diamonds. Only one of those will be a one-carat diamond, and none of them will be two carats … we’d need five times that many to find one. I’ve asked DeBeers how many are mined before a three-carat stone is discovered, but nobody knows the answer.
Additionally, gem-quality diamonds are found in very few places: Africa, Russia, Australia and Canada. The first diamonds were located in India, 3,000 years ago. And for 2,900 of those years, every diamond was mined by hand. Eventually, all the diamond mines in India were mined out (by hand, remember).You could put a price tag of $25,000 on a one-carat diamond for its rarity alone.
Mining Cost
Not only are diamonds extremely rare, but they’re very difficult to come by. 250 tons of the earth’s crust must be removed to find one 1-carat diamond. Think of it another way: you’d have to sift through 250 one-ton dump trucks full of earth to locate said diamond — that’s a lot of dirt to find something the size of a large pea that weighs one-fifth of a gram! Furthermore, diamond miners have gone into savage territories to search for diamonds… and never come back. They have mined secret crevices in the heart of lands where only explorers have gone before… and found nothing. Companies have invested in state-of-the-art technology to dive to the darkest depths of the ocean and vacuum diamonds off its floor.
Centuries ago, countries even fought wars over diamond mines, with the mining interests caught in the crossfire. As a matter of fact, diamond is the most sought-after substance on Earth with the least amount of return! How can you negotiate price when you understand how much it costs to obtain that diamond?
Cut
People who cut diamonds must serve as apprentices for 10 years before can even touch a one-carat diamond. They start on three- and four-pointers, then move up to 10- and 12-pointers, mastering the ability to cut stones of that size. From there it’s quarter-carats, and they have to learn to cut and polish each shape.
Over the years, they’ll continue to improve their capabilities on one-third carats, half-carats, three-quarter carats … in fact, they’ll cut thousands of diamonds before ever touching a single one-carat stone. Now, because of society’s obsession with size, 90% of all diamonds are cut to retain weight, sacrificing brilliance and beauty. Only 10% are cut to fine make criteria, and only one-tenth of 1% are cut to ideal standards. The better the cut, the more expertly-skilled the cutter must be. They are therefore more difficult to find, and more costly to employ. Very few cutters have the ability to cut fancy-colored diamonds. These are not skills learned in college, but are rather passed on through families, and trained over many years. These cutters have hands as skilled as a surgeon’s, and can tell that a facet is correctly polished by the sound it makes on the wheel!
You were already at $25,000 for the incredible rarity of diamonds. Add $25,000 each for the extravagant mining costs and extraordinary skill required for cut, and you’re up to $75,000 for a one-carat diamond. But wait … there’s more! Tune in next month to discover three more critical reasons why a diamond is the best value for anyone’s dollar. Meanwhile, do me a favor, and don’t undersell those diamonds!
This story is from the April 2005 edition of INSTORE.