Learn the secrets

Preface | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8

Step 6: Learn how diamond dealers secretly price diamonds

When diamond dealers trade diamonds amongst themselves they constantly refer to what is known in the industry as The RAPAPORT LIST to check the value of the diamonds they are pricing. The RAPAPORT LIST is a survey conducted by the Rapaport company among numerous diamonds dealers that determines the average price paid for every combination of carat weight, color, shape and clarity for a specific time period.

Once a category of diamond has been assigned a "list price" diamond dealers know how well they have purchased a diamond they are contemplating, depending on the discount they have received off of the list price. Once a diamond buyer determines exactly what size, color, clarity and shape they are looking for, the discount off of The RAPAPORT LIST becomes the single most critical factor in determining how well they have purchased their diamond. Obviously, the better the discount off of list price, the more value you have gotten.

Yet why is this RAPAPORT LIST so important to a diamond dealer? With the numerous combinations of color, shape, clarity and weight of diamonds in the marketplace, there are millions of possible price categories to memorize which would take a lifetime of experience to gather. This would be nearly impossible to do. With The Rapaport company hard at work tallying all this price information for you, you can benefit from all of this trading experience by knowing one single number. Consumers should thank Rapaport. Without the list, the purchase of a diamond would be a completely "blind purchase" with the advantage in the hands of those market makers with the most experience. Today, the spread or profit in diamond prices has been reduced as savvy consumers use the list price as leverage to "hold out" on sellers until they lower their prices to more competitive ones. The list also allows you to compare two or more diamonds using one simple number as a yardstick.

What factors can influence the varying discount rates off the list price? Is the discount rate you've received off of the list price simply a matter of how well you have negotiated your price? the answer is no. There is more to under- standing the discount off of list price. The two other critical factors that can influence the discount off of list price are (1) make and (2) demand.

What exactly is meant by the "make" or “cut” of a diamond and how does this affect the discount off of the list price? When diamond cutters are presented with the challenge of cutting newly mined irregularly shaped rough diamonds into polished symmetrical stones, they must determine the optimal size and shape they can yield from a rough diamond without leaving too much waste.

After all, with diamonds being so very expensive, a large amount of waste can translate into heavy losses. Diamond cutters know the perfect shape and proportions a polished diamond should have to make it the most beautiful and brilliant it can be. A "perfect" diamond with "perfect" shape and "perfect" proportions is known within the industry as an Ideal Cut Diamond. Based on how well their shaped, well cut diamonds or Ideal Cut Diamonds can shine more brilliantly and are considered more rare versus poorly cut diamonds that are rushed to market regardless of how well they are shaped.

Those diamonds that are Ideal Cut and perfectly shaped are more sought after by consumers making them more in demand, Because of this increased demand for Ideal Cut diamonds, their discount off the RAPAPORT LIST is less than a poorly cut diamond. Determining the exact definition of Ideal Cut diamonds and superior make is a topic we will examine very closely in our Buyer's Guide. For now, it is important to understand that superior cut diamonds are less discounted than poorly cut diamonds. At any given time, you are more than welcome to phone American Diamond and request a quotation for the LIST PRICE of a diamond from the RAPPAPORT LIST. Our expert sales professionals will also help you determine the discount off of the RAPPAPORT LIST for the diamonds you are interested in.

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