The Truth About Online Jewellery – The 5 Values of a Diamond Ring

5 Values of a diamond ring

The 5 Different Values of a Diamond Ring.

Confusion often arises between the cost and value of an item of diamond jewellery. From the initial purchase, through valuation, to private sale, price often varies. It is important to understand a little more about the basic costs of rings, to dispel any incorrect ideas. Also to clarify why similar items of jewellery appear priced so differently from one seller to another. We sell many similar items of jewellery ourselves at lower prices than some High Street store. Many people contacting us for the first time query why prices are lower. The following 5 costs will give a better idea for the consumer.

1. Scrap Price

This is the lowest price attributed to a diamond ring. This cost will depend upon the basic metal scrap value, factoring in any basic costs for unsetting stones. It is far wiser to refurbish an item of jewellery than to scrap the item owing to the cost difference. This is because the scrap value has no consideration for the design, labour, time, sentiment and all of those other details that are poured into an item of jewellery when it is made.

Many retailers, pawnbrokers and gold-buyers will offer scrap price, or below this. Scrap metal prices change daily and appear listed online by such companies as Cookson Gold. Despite offering scrap value, many dealers will refurbish and sell jewellery second hand, rather than break the piece down for the materials. This is far more profitable, but depends on the item actually selling, whereas scrapping an item results in instant payment, hence the popularity of Cash for Gold style outlets.

2. Manufacturing / Jewellery Maker’s Cost

When a jewellery manufacturer produces an item of jewellery, the cost of the metal, diamonds (or stones, if present) are all considerations, along with the cost of initial design (where applicable), labour and time to make the ring, through the many stages of production. Other costs such as fashion prices may also be applied along the way. The jewellery manufacturer will then apply their own margin to the finished goods, selling these on to the retailer, or end client. Our prices are formed on this basis. Since we have the ability to calculate all elements of any given item, we are fully aware of our own cost prices on each item, regardless of changes in market prices for raw materials.

3. Online Retail Price

This can relate closely to (2) above. Many online retailers produce and source castings, raw materials (such as certified diamonds or precious / semi-precious stones) in the same way that a manufacturer would. In effect they act as a manufacturer selling directly to the end client. Applying their respective margin to the finished items, jewellery is sold. Varying standards exist for service, materials, quality of finish the way the store trades. Many online retailers now strive to give the necessary independent feedback to demonstrate reputation.

Some online stores sell only finished pieces of jewellery, sometimes imported (directly or through an agent / importer) from overseas (to cut manufacturing costs). Buying finished items manufactured overseas means cheaper production costs which enables a more competitive price for jewellery. This can also be found on the High Street, but usually incorporating higher profit margins.

It is a common misconception that lower overheads are always the reason why online retailers are less expensive. The fact of the matter is many online retailers like ourselves have commercial premises, offices, staff and showrooms. We provide showings on an appointment basis to add value and privacy to the time we spend with clients.

This can sometimes be a factor, but the cost of website development and marketing can mean many online retailers have higher overheads than many independent jewellers. Online jewellers often work at lower profit margins, but standards can vary enormously. For example although our pricing is much lower than High Street prices, we work with laboratories such as GIA and IGI daily, but adhering strictly to minimum cut grades (Very Good) as standard, where applicable. We also employ rigorous quality checks before any item leaves to ensure each piece has been created to our usual standards.

4. High Street Retail

Owing to high overheads, many High Street jewellery chains strive to buy competitively, often importing from abroad, finished items of jewellery, or by purchasing from manufacturers. Since the manufacturer has already added their own margin, the final high retailers profit can mean a substantial difference to savings that can be found online. Some buyers prefer the reassurance of purchasing face-to-face, one of the reasons many online stores now offer consultations. Online jewellery has become serious threat to High Street jewellery stores, owing to the large difference in prices for similar items of equal quality.

Even on the High Street, a great variation of jewellery quality can be found, from discount stores, through to high-end jewellery boutiques.

Cheaper discount jewellery stores mean a great price on the High Street. This can sometimes indicate mass production, cheaper materials, lighter metal weight, and other methods used to reduce the cost of materials. That speedy discount, or fantastic sale price often indicates a very high profit margin to begin with. Many High Street retail stores do provide fantastic quality, and service, but traditionally work at much higher margins on jewellery sold.

5. Insurance Value

The insurance value of an item must acknowledge a realistic replacement value, irrespective of where the item has been purchased. This will usually be much higher than the purchase price of the piece. It is usually the highest value of a diamond ring. Although the valuation cannot be future-proofed owing to the changing cost of raw materials, most valuations should cover the insured item in the short-term until an updated valuation is arranged. Most independent jewellers provide appraisals and valuations with items sold, and these should not be confused with diamond certification which should be noted (where applicable) on the valuation.

When we produce a valuation for insurance, we need to appreciate that the item may be replaced in the future, locally or on the High Street. For this reason, we apply a suitable value on this basis. This can be getting on for twice our own selling price for many of our items.

For a fully independent insurance valuation, we tend to recommend Safeguard at the Assay Office. Unlike our own valuations, suitable for insurance (each item of diamond jewellery is provided with one) Safeguard valuations are an additional paid for service, but can be arranged independently of the retailer.

On a Final Note

We would emphasise another factor, often forgotten when considering jewellery value. Origin and provenance of a piece of jewellery. Perfect examples are pieces of estate jewellery sold at auction, where the value is far higher on account of the heritage. Limited editions, designer pieces and items that are hand made or made on a small scale, with personal care and attention often demand a higher price. Buying a piece of carefully chosen jewellery, handmade, or through a well known designer can often carry a much higher price owing to who has made the piece. Valuable antique jewellery often carries history, from the owners and period it was made, through to the marks and pattina picked up along the way.

For most items of jewellery, regardless of age, provenance and material cost, we acknowledge and appreciate the value of sentiment. Irreplaceable and unique to each and every item. A consideration, as jewellery professionals we never forget.

Mark Johnson

About Mark Johnson

Mark attended Liverpool University and went on to pursue a career in the diamond industry. After more than a decade working in polished diamonds, Mark moved to the Isle of Wight where he launched Serendipity Diamonds. He works most days from their busy Ryde showroom, photographing jewellery and writing for the Serendipity Diamonds website.

Mark Johnson

About Mark Johnson

Mark attended Liverpool University and went on to pursue a career in the diamond industry. After more than a decade working in polished diamonds, Mark moved to the Isle of Wight where he launched Serendipity Diamonds. He works most days from their busy Ryde showroom, photographing jewellery and writing for the Serendipity Diamonds website.