Diamond Pricing and the Four C’s

The price of an engagement ring is greatly influenced by the cost of the center diamond. In fact, for a classic one carat diamond solitaire over 90% of the price of the engagement ring will be in the diamond. So an engagement ring shopper needs to be aware of the various characteristics of a diamond (known as the “Four C’s”) and how they ultimately affect the quality and price of the diamond.

The Four C’s of a diamond are its: Color, Cut, Clarity and Carats. This tutorial will cover all of these factors and show you how to get the best value and quality diamond for your budget.

Color

The most common type of diamond used in engagement rings is the colorless, or “white” diamond.

Diamonds that are actually colored (red, blue, green, yellow, etc.) are collectively referred to as “Fancy Colored Diamonds” and generally are much more expensive than colorless diamonds. This tutorial covers colorless diamonds. For more information on fancy colored diamonds see our Fancy Colored Diamonds article.

A perfect “colorless” diamond will have no impurities in its crystalline structure. If impurities (typically nitrogen) found their way into the crystal during its growth the diamond will take on a yellowish tint. The more yellowish tint the diamond has the less valuable it becomes. (The exception is when the diamond becomes very yellow, at which point it is classified as a fancy colored diamond)

Colorless diamonds are graded on the industry-standard GIA scale that ranges from D (colorless) through Z (light yellow).

diamond color

If price were no object, one would simply select a diamond in the “D” (colorless) range and be done with it. Unfortunately, for most of us price is an object and some compromises will have to be made.

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For example, suppose you have a budget of $5500 for your diamond. For that price you can purchase a very nice 1 Carat H Color (SI1 clarity and Excellent cut) diamond. The same diamond in D color would be over $7000. However, you can get a D colored diamond for $5500 if you are willing to drop to 0.9 carats (which actually isn’t too bad of a compromise). These are the kind of trade-offs you can make when diamond shopping.

Looking at the chart of Diamond Prices vs Color Grade, the numbers are the percentage relative to the price of a G colored diamond. (For example, a F colored diamond costs about 10% more than a G. An E is 25% more than a G, an H is 15% less than a G, a J is 35% less and so on…)

Below are some pictures of actual diamonds, all 1 Carat (VS1 clarity and Excellent cut) together with their price and Color rating. (Click image for larger picture)

D color, $15,170

D color – $15,170

G Color - $8,860

G color – $8,860

H color - $7,520

H color – $7,520

I color - $7000

I color – $6,710

J color - $5500

J color – $5260

K color - $4,970

K color – $4,970

Diamond Color Buying Tips

It’s best not to set a colorless diamond (D-F) in a setting with a yellow band as the yellow color of the band will show in the diamond and the whole point of buying a colorless diamond is lost.

If your engagement ring is going to have a yellow band, you might be able to select a diamond in the J or K range and put the money you save into selecting a larger diamond.

Due to lack of demand, most jewelers won’t carry anything above the M range.

So which color grade to choose? In general, most people find the best value in diamonds in the G,H,I (near colorless) range. Once mounted in a ring, they may appear as colorless as a D diamond and are often half as expensive.

Clarity

Clarity is measurement of how many imperfections a diamond has, either inside the diamond or on the surface, and to what extent those imperfections affect the appearance and value of the diamond.

The two types of diamond imperfections are blemishes (on the surface of the stone) and inclusions (inside the diamond itself). Inclusions and blemishes can greatly affect the value of a diamond, especially if they are visible to the unaided eye or cause the diamond to appear murky. In addition, cracks near the surface can reduce the diamond’s resistance to fracturing.

Diamond Clarity is graded on the industry-standard GIA scale, that ranges from Flawless (diamonds that are completely free of inclusions), to Included 3 (diamonds which possess heavy inclusions visible to the naked eye).

diamond clarity

Flawless (FI) The very rare “Flawless” diamonds will show no blemishes or inclusions even when examined with 10x magnification.
Internally Flawless (IF) When viewed with 10x magnification, IF stones will show no inclusions and only insignificant blemishes.
Very Very Slightly Included (VVS1 and VVS2) VVS diamonds contain minute inclusions very difficult to see under 10x magnification. Any inclusions will be invisible to the unaided eye
Very Slightly Included (VS1 and VS2) VS diamonds will contain only minor inclusions. These inclusions are visible with 10x magnification. However, the inclusions are not visible to the naked eye.
Slightly Included (SI1 and SI2) SI stones contain noticeable inclusions under 10x magnification. SI1 inclusions are usually invisible to the unaided eye. With close inspection, SI2 inclusions are often visible to the unaided eye
Included (I1, I2, and I3) I-grade diamonds contain inclusions which can usually be seen with the unaided eye. These flaws can seriously affect the transparency and brilliance of the diamond and may impact the diamond’s durability. In general it is best to avoid these grades, especially in larger sized diamonds.

Below is an I1 clarity diamond with a clearly visible “feather” type inclusion…

I1 Clarity Diamond, note visible inclusion highlighted in red.

I1 Clarity Diamond (1.00 Carat, G color, Excellent cut) $4,170, note visible inclusion highlighted in red.

Inclusion Plot for the I1 clarity diamond.

Inclusion Plot for the I1 clarity diamond.

Fortunately, most diamonds don’t have such obvious flaws. So the GIA report that comes with your diamond will include an Inclusion Plot [See above] that shows the locations and types of inclusions your diamond has.

A couple points about the inclusion plot: The “grade-setting” (worst) inclusion will be listed first. Internal imperfections are labeled in red and external imperfections are labeled in green.

There are a number of different types of inclusions. The amount of inclusions and the type and location of these inclusions will dictate the diamond’s clarity rating. Some common examples you will see on a GIA report are:

  • Crystal – A crystal is a small impurity of another mineral embedded within the diamond crystal lattice. When viewed with overhead lighting, these crystals may appear as black spots.
  • Pinpoint – A pinpoint is simply a tiny crystal and appears as a small point, often white colored, when viewed under magnification.
  • Needle – Needles are crystal impurities in the shape of a long, thin “needle” when viewed at 10X magnification. Needles may appear as black or whitish lines.
  • Cloud – A cloud is a grouping of pinpoints. The pinpoints are often tightly packed together and too small to be viewed individually so together they appear as gray or whitish clouds within the diamond.
  • Feather – Feathers are small microscopic fractures or cracks within the diamond. Generally, feathers do not pose a durability problem under normal wear and care. Depending on the viewing angle, feathers can be reflective, whitish, colored or transparent.
  • Twinning Wisps – These are inclusions in diamonds that have twisted together during the time of diamond formation.

graphclarity1

As with color, if price were no object, you would simply choose a flawless or internally flawless diamond and move on. However you would pay a significant premium for an IF diamond compared to a VS1 diamond but without any visual (to the unaided eye) benefit.

Looking at the chart of Diamond Prices vs Clarity Grade, the numbers are the percentage relative to the price of a VS1 clarity diamond. (For example, a VVS1 clarity diamond costs about 20% more than a VS1. A VS2 is 10% less than a VS1, a SI1 is 25% less and so on…)

Diamond Clarity Buying Tips

Most people are happy with a diamond in the VS1-SI1 range. The inclusions are still invisible to the unaided eye, yet they are significantly less expensive. These grades offer the best quality for the price.

SI2 diamonds can be a bargain hunters delight. While the inclusions tend to be more visible, the price can be half that of a VS1 diamond. So with a little investigative work, the SI2 sleuth can find some great deals. One excellent tool that is available at James Allen is their “360o Diamond Display Technology”. Every diamond at James Allen has a 360o 15x resolution movie made of it so you can view the diamond’s inclusions. Are the inclusions black or white (black are more noticeable), can they be hidden under a prong or bezel setting, etc. Also check out our Bargain Hunting SI2 Diamonds page for more information.

If you’re on a tight budget you might want to look into the I-grade diamonds. I-grade diamonds are popular in “preset” engagement rings that you might find at Zales. Preset rings are those in which the diamond is already mounted in the setting and the two are sold together as opposed to higher end stores where you buy the setting and diamonds separately. You can find terrific deals with preset rings as long as you keep in mind that the diamonds are of a lesser quality. Also visit our Engagement Rings For Under $1000 page for more info.

Cut

diamond cut

Cut refers to how well proportioned the diamond is. The cut is arguably the most important characteristic of a diamond, since it has the greatest influence on the overall beauty of the diamond. The better a diamond is cut, the more brilliance, fire and scintillation it will have.

Brilliance is a measure of all the “white” light that is reflected by the diamond. Fire refers to the sparkles of colored light. And Scintillation describes the bursts of light you see when the diamond moves. For more info, check out our article on diamond sparkle.

The term “cut” can be confusing as it often also used to describe the diamond’s shape: round cut, emerald cut, princess cut, etc. However, the “cut” refers to the proportions of the diamond, not its shape.

diamond cut

The cut of a diamond determines the gem’s light performance. When a diamond is cut well, it reflects the light back out of the top of the diamond (the “table”). If the cut is too deep, then light escapes out of the side; too shallow, and light leaks out of the bottom making the diamond appear lifeless or dark.

For standard round brilliant diamonds, the GIA (Gemological Institute of America) rates diamonds on a cut scale ranging from Excellent to Poor.

Excellent The highest grade of diamond Cut. Reflects almost all the light that enters it. Maximum sparkle.
Very Good Very Good: A great amount of sparkle and fire is evident in these gems. Reflects most of the light that enters it.
Good An above average appearance. May offer a good value for the money. Reflects a majority of the light.
Fair Diamonds which allow much of the light that comes in to escape. Brilliance and sparkle are reduced.
Poor The brilliance and sparkle of the gem is greatly reduced. Most of the light entering the diamond is lost.

graphcut1

Note: GIA only provides cut grade for Round diamonds. Fancy cut diamonds, such as the Princess cut, do not have an official GIA grade. However, jewelers often establish their own cut grades for fancy cut diamonds, which unfortunately are not standardized. Some jewelers may have more “generous” cut gradings than others. As always, buyer beware.

Looking at the chart of Diamond Prices vs Cut Grade, the numbers are the percentage relative to the price of a Very Good Cut diamond. (Note, an Excellent Cut diamond costs about 15% more than a Very Good. A Good is about 10% less than a Very Good)

Diamond Cut Buying Tips

Most online jewelers do not offer Fair cut or Poor cut diamonds.

Try to obtain the best Cut diamond you can afford as the diamond’s sparkle and brilliance is determined by the cut. Excellent/Ideal is preferred.

Below: Nice video showing the difference between a GIA Excellent cut vs a GIA Very Good cut. (The Very Good cut isn’t as good as the excellent cut, but it holds its own pretty well.)

Carat

This is the term that most people are familiar with. The first question that is asked by many buyers, or friends and family that see a new diamond ring is usually, “Oh, how beautiful! How many carats is it?”

Technically speaking, the number of carats a diamond has is a reflection only of how much the diamond weighs, and not necessarily how big it is. One diamond can weigh more than another next to it, but depending on the diamond’s shape and cut may appear to be smaller. However, in general, the more carats a diamond has, the bigger it is. Below is a comparison chart of carat weights vs diameters for an Excellent Cut Round shaped diamond.

diamond carats

A carat is 1/5 of a gram. Carats are also divided into smaller units called “points”. There are 100 points to a carat. Example: A diamond that is 50 points is half of a carat in weight.

graphcarat1

Due to the scarcity of larger diamonds, the price of a diamond goes up dramatically as its carat size increases, as can be seen in the Diamond Price vs Carats chart.

For example, a 2 carat diamond is almost four times as expensive as 4 half carat diamonds.

Which is why rings with many smaller diamonds rather than one large rock are so popular with engagement ring shoppers on a budget. You can get a lot more “bling” for the buck!

Diamond Carat Buying Tips

Due to the popularity of the one carat diamond there is often a price jump as you approach 1 carat (See the Diamond Price vs Carats chart). You can save some money by selecting a diamond just below 1 ct, like 0.9ct. It will look virtually the same size, yet be quite a bit less expensive.

In addition to the four C’s, the quality of a diamond’s Polish, Symmetry and Fluorescence will also have an impact on the final price. Lastly there is the “Fifth C”, which is the diamond’s certificate.

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