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.
By International Gem Society 2 minute read
alexandrite - gemstone pricing formulas

Alexandrite and diamond ring. Photo by Christina Rutz. Licensed under CC By 2.0.

Answer: Gemstone pricing formulas do exist. However, there’s more to determining value than formulas.

The Role of Experience

You can certainly find and use gemstone pricing formulas. The IGS Gem Price Guide has pricing parameters for many gem species, such as alexandrite. An alexandrite with specific qualities and weight should have a retail price per carat of $X.

You can learn more about alexandrite value factors by consulting our alexandrite gem listing as well as our buying guide. You can also learn more about valuing color change gemstones. You’ll discover that color and the degree of color change are the primary drivers of value for these gems. The closer a gem’s color change comes to 100% (meaning the entire gem changes color), the higher the price it can command. Let’s say you have an alexandrite with 60% color change. (The color change only covers 60% of the gem). That gem should sell for about 60% of what a stone with a 100% color change but otherwise the same qualities would be worth.

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 and color change. 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.

The Simplicity of Gem Pricing

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