Are There Any Fair Gemstone Pricing Formulas?


“Alexandrite Diamond Ring” by Christina Rutz is licensed under CC By 2.0
“Alexandrite Diamond Ring” by Christina Rutz is licensed under CC By 2.0

Question

The gem industry is most perplexing and unusual. Are there any ethical gemstone pricing formulas? There are almost no government regulations for appraisals, and although millions of products are bought and sold every day, very few people know exactly what anything is actually worth. Both retail and wholesale prices seem to fluctuate drastically from person to person and place to place. In an industry that is thousands of years old, has anyone ever compiled detailed gemstone pricing formulas? This looks more like mumbo jumbo than business.

My background is in the arts, so I understand the nature of “subjective” pricing structures. But even where these structures are subjective, they still exist and have parameters and precedents. Surely these parameters and precedents must exist in the gem and jewelry industry. Even if they aren’t written down, it must be possible somehow to gather enough of this information to act fairly and with due diligence for one’s clients.

If I want to understand pricing, this Holy Grail of gemology, where do I start so I can know enough at least to buy and sell intelligently and ethically?

Thank you for your time,

Dennis

Answer

There are gemstone pricing formulas. For example, with all other factors being equal, an alexandrite will appraise at $XX per carat. With a 90% color change, deduct 10% from the value. An 80% color change, deduct 20%, and so on. Our Gemstone Price Guide has pricing parameters for many gem species.

I’ve been a gem dealer for over 30 years. Guess how many alexandrites I’ve seen? Not many and certainly not enough to be able to do an honest comparison of colors, inclusions, etc. I only know one person in the US who has the experience to accurately judge the value of these rare gems. Gemstone pricing formulas are only part of the process of determining value. Experience is also key because it’s the only way to develop the skills and knowledge base to do an adequate evaluation.

That being said, I think you’re missing the simplicity of pricing your gems. Gemstones appraise at top retail value, the highest price at which they’re likely to sell. You’ll never get the same price Tiffany’s or a jeweler on Rodeo Drive can demand. Nor do you need to, since you don’t have their overhead.

What you need to do is select your product line, calculate your markup, and stay with that. Remember that a gem is worth what a buyer and seller can agree on. The bottom line is if you’re making enough money. Period.

Donald Clark, CSM IMG

“Jewels” by Ashleigh Nushawg is licensed under CC By 2.0
“Jewels” by Ashleigh Nushawg is licensed under CC By 2.0