Tuesday, March 6, 2012

Letter to One of Our Customers

Today while going through some old Word documents I ran across an old letter I had written to a customer who had inquired about diamond pricing.  As I reread my letter I though it might make sense to post it on the Blog.  I realize I have blogged about this issue in the past, but I felt the topic was worth revisiting.  Here's the original letter:

 

April 08, 2010

 

Hi XXXXXXXX,

 

Glad you asked about diamond pricing and why some stones are cheaper or more expensive than stones that appear, on paper, to be similar in quality.  The easy assumption is that all diamonds of a given size and quality cost the same, and that some diamond sellers just want to make higher margins.  This obviously is not true, and margins are not the primary reason for the broad price range you find in the marketplace.

 

You have just finished personally inspecting several 2 carat sized gems.  You saw a variety of quality grades, and some of the GIA graded SI 1 stones you looked at appeared under our microscope to be not as clean as some of the SI 2 graded gems.  Some higher color graded stones appeared to be darker in hue than gems which, according to their grade, should have been whiter.  Some gems were deeper and some wider for the same carat weight.  Some gems had bigger or smaller tables - their assorted crown angles varied; there were different girdle thickness, and these stones ALL LOOKED DIFFERENT.

 

If I do a computer search through our primary wholesale diamond database, and search only stones which are between 2.00 and 2.05 carats in weight, all graded E in color and SI-2 in clarity, all graded Very Good Cut, and all GIA certified, the WHOLESALE price to me ranges from a low of $12,663 to a high of $21,420.  On paper these stones are all graded EXACTLY the same by the GIA.  It should be obvious to you that not all stones with equal grading are in fact equal in value, or equal in appearance.

 

As I began looking for a stone to meet your request I avoided searching for only the cheaper stones, as my 30 years of experience in the diamond business has convinced me that cheap stones are typically discounted for a good reason.  Instead of shopping for price, I concentrated on locating a stone for you that was a real GEM, with all of its quality ducks in a row.  After your side-by-side comparisons of several diamonds, the gem you selected from among those stones was a great stone, and extremely well priced. 

 

If you really want to buy the cheaper rock let me know.  However, I suspect you would feel more comfortable giving your fiancée a gem that was selected on quality, not on price.  Let me know what you want to do; I have your ring here, but can send it and the diamond back if you think a less expensive stone is the way for you to go.

 

 

Joe Thon,

Partner, NEGS