Diamond Pricing Relies on Demand and Supply

Learn about the dynamics that influence the price of diamonds, and how to stretch your design budget with the judicious use of diamond carat size.

Last edited: 10/30/2019

Diamonds are sold by weight and we've all been trained to want a one-carat diamond. But nature doesn't care about our whims. Diamond crystals form independent of any market demand. The supply of diamonds tends to be plentiful for small stones, but extremely tight on really big diamonds —nature will only produce that exceptionally large crystal once in a while. Take a look at this chart:

demand supply chart

The chart shows how supply is vast at the 0.01 ct. size, but that it steadily declines as we approach five-carat diamonds. What happens on the demand side? The bars show the relative increases in price for a similarly graded stone of various sizes. It's easy to see that the trajectories are very different.

Nature steadily produces fewer and fewer stones of the next size up. It's easy to get fixated on particular target numbers on the carat scale, and this fixation creates a market demand for that one-carat diamond, or maybe that three-carat diamond, so prices spike once that magic weight threshold is crossed.

Why should you care? Well, if money is no object, you won't care. But for most of us, a bargain is very welcome. Finding beautiful materials is a rush, and finding them at a good price is even better! And here's the good news: A diamond that weighs 0.85 ct is going to have 95% of the apparent size of a 1.00 carat diamond, but it is going to cost perhaps 40% less! Our advice for diamond buyers is to consider slightly off-sizes. Here's another example: Dreaming of a three-carat diamond? Consider buying a 2.90 ct. It may cost as much as 25% less.

Rio Grande's gemologists can help you find these bargains. You can always call us directly at 1-800-257-7026, or visit the Rio Diamond Source where you can search for your bargain among the many diamonds we can provide to you.