A Comprehensive Guide to Buying Diamonds

Last updated on April 24, 2023

Our product recommendations are made independently, but we may earn affiliate commissions if you use a link on this page.

Formed under immense pressure and extreme heat miles below the surface of the earth, diamonds are rare gemstones that have developed a high premium for their beauty and many physical qualities. Essentially made from carbon, a diamond is a far cry from the black rugged rock like material from which it originates.

These rare and valuable gemstones are highly sought after for a host of reasons with applications as decorative jewelry and also industrial use. When it comes to buying your first diamond or for that matter your second, third or fourth it is always a big decision.

Each diamond is as different as a snowflake and the purchase of such a thing can be a very personal choice that requires due consideration. In this comprehensive guide we will walk you through all the important aspects that should be considered throughout the purchase process.

We will start with the basics such as price but we will also look into the more complicated aspects of choosing the right diamond and of course the best type of dealer from which to buy. It is a process fraught with pitfalls and if not undertaken with care can see you cheated and out of pocket.

How Are Diamonds Priced?

The best place to start when it comes to understanding diamond pricing is to understand the big scam that the industry plays on the consumer market. We are constantly told that diamonds are tremendously rare and hence we must pay a lot to own one of quality.

What is the truth of this? Well simply put rough uncut diamonds are more plentiful than you might imagine but the diamond industry has control over how many of these rough diamonds are mined and cut to become jewelry quality gemstones.

So although there is no shortage of raw diamonds sitting in the ground waiting to be mined and processed the powers that be in the industry trickle out their products in order to keep prices high. It’s that old commercial rule of supply and demand, they control the supply in order to increase demand.

We mention this not to sour your opinion on purchasing diamonds because frankly they are such things of beauty and amazing structural design that they are worth paying a high price for. Yes they could be made cheaper but honestly when it comes to the psychology of it all if they were more common and less expensive how highly would we really prize them?

The thing we should focus on is that these beautiful clear shining diamonds are sometimes billions of years old and are one of the hardest materials on the planet. They say “diamonds are forever” and this is very true.

So when it comes to how a diamond is priced there are a number of factors which we will now elaborate on.

The Four C’s

When it comes to determining the value of a diamond, experts factor in what is known as the four C’s which stands for carat, cut, clarity and color. These are essentially the main legitimate variables that dealers consider although, as will become apparent, the less reputable diamond traders do use some less legitimate variables as well. Theoretically the four C’s of a diamond are graded by an independent third-party gemology lab. These labs have no skin in the actual trading of the diamonds so should not have any reason to inflate a diamond's worth.

The top three Gemology Labs in the US are:

Gemological Institute of America (GIA)

International Gemological Institute (IGI)

American Gemological Society (AGS)

Carat

You have likely heard of the term carat before when it comes to jewelry often in terms of gold, for example 24 carat gold. What exactly is meant by the term Carat? Well essentially it is a term that is related to weight.

Diamonds are not only very hard but they are also extremely dense due their close packed crystalline structure. In the modern system a carat in weight terms is equal to 0.2 grams roughly the weight of a paperclip.

Using specially designed scales the gemology labs will weigh the diamond once fully cut and prepared to get a result in grams. By dividing the actual weight of the diamond by 0.2 you will get the carat weight of the item.

As an example a diamond weighing 0.6 grams would be considered a 3 carat piece. This would be considered a large diamond compared to what you would ordinarily find in a ring as they tend to range between 1 – 1.9 carats in weight.

The carat weight is not factored in until all of the other four C’s have been determined as it is only the weight of a finished diamond that matters. Raw diamonds need to be cut and the material removed is often discarded for being of little value.

Obviously the heavier the diamond the more valuable it is due to the fact that large diamonds are rarer. The largest diamond ever found was the Cullinan diamond which was unearthed in South Africa in 1905. The raw diamond weighed 3,106 metric carats and was painstakingly cut into nine large gemstones as well as 97 brilliants and a number of other small unpolished fragments.

Clarity

If you are new to the world of diamonds you may not have heard the term clarity before but this is an important aspect when it comes to determining the value of a diamond. As the name suggests clarity refers to the transparency and purity of an item.

All diamonds have imperfections which are often referred to as inclusions or flaws. They may be specks, areas of cloudiness or signs of feathering. Gemologists will look closely into the body of the diamond looking for these imperfections.

The better the clarity of the diamond the more valuable it is. So if the experts are seeing few imperfections then the value of the gem is going to be higher but the more issues that are visible the more the price will drop.

The diamond clarity scale according to the GIA is as follows:

Color

In general terms for a high quality diamond experts will be looking for what is known as a white diamond. This is a diamond that is as close to completely transparent as possible. Almost all diamonds have at least some coloration if only a little yellowing.

This does not mean that colorful diamonds have no value because in fact they still do. Variations of colors in diamonds are very normal and all will have some value. Colored diamonds are referred to as fancy diamonds and will generally be cheaper.

There is an exception however as fancy blue and fancy red diamonds are both exceptionally rare which makes them more sought after. This is why certain shades of these colors can be very expensive indeed.

According to the GIA there are 23 color grades for white diamonds which are labeled using letters. The grading is as follows:

D-F: colorless

G-J: near colorless

K-M: faint

N-R: very light

S-Z: light

Cut

This final C refers to an aspect of the diamond which is in the hands of the person who worked the raw diamond. Now often people confuse this with the specific shape the diamond is cut to such as the princess, cushion or heart cuts. This is not the case when it comes to the value of the piece.

What cut actually refers to is how well the craftsperson did at cutting the diamond into its final shape. How they took the rough diamond and cut it into the gemstone that is now intended for sale.

When diamonds come out of the mines they look like little rocks still encrusted with the material in which they were found. The craftsperson will use their expertise to strike the diamond along planes of cleavage to remove unusable materials and expose the gem.

Experts will judge how well the craftsperson has done in terms of making the diamond proportional, symmetrical and pleasingly shaped. The intent is to maximize the fire, sparkle and brilliance of the gem.

The quality of the cut then is measured by 5 grades which according to the GIA are Poor, Fair. Good, Very Good and Excellent. Quite obviously the better the cut rating the more valuable the diamond will be.

Do Diamond Prices Fluctuate?

This is a reasonable question to ask especially when you consider the almost constant increase in gold prices globally. It is not becoming rarer in fact the increase in price is urging miners to work harder to pull gold from the ground and even from the ocean floor.

You may be forgiven then for thinking that diamond prices would also fluctuate as well. The truth is as mentioned the industry is so well controlled that prices are kept pretty much stable. This is why a sudden price drop or sale on diamonds should be eyed with caution.

A sudden drop in price may indicate the gems were already overpriced or that something a little more shady may be going on. Jewelers do not accidentally buy too much diamond inventory so a doorbuster sale offering 50% off may not be completely above board.

Do Diamonds Make a Good Investment?

There are many things in this world that we can buy as an investment, a house for example can make us money overtime. Diamonds however are not the kind of things that will increase in value over time. In fact, like cars you may find the diamond loses its resale value.

The only way you could conceivably consider diamonds as an investment would be if you operated a business renting out jewelry to high end clients. There are in fact such companies which rent out diamond jewelry for events such as weddings.

When it comes to buying the diamond as an investment however which you hope to sell when prices increase this would be a mistake. The industry is too well controlled so the prices rarely fluctuate. Any appreciable value change would be from other materials of the piece of jewelry such as gold or silver in a ring or necklace.

The truth of the matter is that should you try and resell a diamond which has been fitted into a piece of jewelry you will likely find that you can not get what its market value should be. In fact you may find it has lost up to 25 – 50% of its original value.

What Kind of Diamond Can You Get for Your Money?

The best thing about diamonds is that they are very much not all created equal which means that when it comes to price there should be something for everyone’s budget. In this section we are going to use the very handy pricing tool from James Allen to give you some idea of the types of diamonds you can get based on price.

$200 - $300

In this price range you will find a fair few options with sizes ranging from 0.18 – 0.35 carats. When it comes to shape most in this range will be round diamonds. The ct quality will also range from Good to Excellent.

$500 - $1000

Jumping up a little in price you will start to see heavier diamonds upwards of 0.5 carats and more diversity in terms of shape. This is because you can do more with larger diamonds in terms of shape than you can with the smaller ones.

Cutting diamonds is a tricky process and to say the least delicate at the best of times. The smaller the diamond that is being worked the less that can actually be done.

There are over 51,000 diamonds in this price range at James Allen of various sizes, shapes and cut qualities.

$1000 - $2000

This is a very common price range for diamonds which features options that are as heavy as 1 carat. These would obviously be on the high end of the scale but would also perhaps be of slightly lower quality.

With all the factors that go into determining price you will see a great deal of variation so if you have a heavier diamond you may find the cut is only good rather than excellent. You may also find there are differences in clarity and color.

$2000 - $5000

At James Allen you will find as the price increases so does the rarity with just 140 diamonds being available at $5000. These are generally a carat or more in weight and of varied quality for the most part. The range of shapes is good in this price range as the larger diamonds are suitable for creative shaping.

$5000 - $10,000

Jumping up into the more expensive range there are over 40,000 diamonds available at James Allen in this price range but less than 50 at the $10000 price mark. Some of these $10,000 diamonds actually exceed the 2 carat mark in terms of weight.

You will see variation in weight in this price category with factors like clarity, cut and color having a big impact on the final price. A 2 carat diamond sounds great but you must factor that it may have imperfections, a non perfect color and the cut quality may only be good.

$10,000 - $20,000

As the price range increases so too does carat weight, cut quality, clarity and color. There is a good selection in this price range to choose from. In terms of carats you can find diamonds at around 2.5 carats in the $20,000 range which are ideal in terms of cut.

$20,000 - $50,000

There truly is a wide range of diamonds available with over 10,000 available in this price range. As we reach the high end we start to find diamonds in excess of 5 carats with various levels of cut, clarity and color. When searching for yourself you will want to balance your priorities.

Do you want a large diamond which may be a little flawed if scrutinized closely or would you favor a more perfect diamond which is a little smaller? This all of course comes down to personal choice.

How High Do Prices Get at James Allen?

The price ranges are vast based on the James Allen diamond search tool but just how far does it go up in price. As of early April 2023 James Allen featured two diamonds in their inventory that were in excess of $2 million. These are:

A 22.70 Carat flawless diamond with only slight coloration with an excellent cut and round shape worth $2,362,270

A 18.91 Carat completely colorless VVS2 (very very slightly included) diamond with an excellent round cut worth $2,410,030

When you compare the two diamonds you see the more expensive of the two is considered completely clear when it comes to color. It is lighter and not completely flawless unlike the less expensive. This would indicate that in this case that a completely transparent diamond is more important than one that is slightly heavier and less flawed.

How Much Do Engagement Ring Settings Cost?

As one of the more common reasons to purchase a diamond is to place it in an engagement ring it is probably important to factor the cost of the setting before choosing the diamond. When we refer to the setting we are talking about the ring itself and the prongs that will hold the precious diamond in place.

Staying with the James Allen engagement ring builder you will find with them at least that at a minimum you will be paying $250 for the setting in which the diamond will sit. This will get a 14K white gold knife edge solitaire or a 14K white gold presentation solitaire.

On the high end the most expensive engagement ring setting in the James Allen inventory is an 18K Rose and Platinum Venetian engagement ring for $7,610. Just as with diamonds there are options to fit most budgets and logically if you are paying a high price for a diamond you will likely want to get a comparable quality setting in which to show it off to its best.

Do James Allen Prices Reflect the Market?

The truth is with almost all consumer products we as a society will tend to pay extra for a name. For example the same type of diamond at James Allen may cost much more if sold by a company such as Tiffany & Co.

You pay for the bragging rights to tell people you are wearing a Tiffany engagement ring and there is absolutely nothing wrong with that at all. When it comes to being closer to actual market value you will find online companies such as James Allen are more inline with the true value of the diamond.

They will tend to be less expensive than their competitors in the online market and far less expensive than brick and mortar jewelers but we will discuss that later.

So the simple answer is that the prices at James Allen are often closer to the assessed value of the diamond based on the findings of the gemology experts. There will of course be a mark up because business is business but not as high as you might find at the big names in the industry.

Where Should You Buy Diamonds?

It may not be common knowledge but there are a few options when it comes to purchasing a diamond. It is therefore important to understand where you can get them from and if there are pitfalls related to certain options.

In this section we will look at the four main places to purchase diamonds to compare and contrast them. It is important to make sure you are getting a quality legitimate product for a fair and reasonable price so read on to learn more.

A Jewelry Store

How very retro this must feel these days, actually going into a brick-and-mortar storefront but it's one of the two ways that this kind of purchase has always been done. There is also a certain romance to buying jewelry in an actual store.

As with all things in life you will find both pros and cons for choosing this method which you really will want to weigh up.

As we say there is something romantic about shopping in an actual Jewelers for a diamond it is a more tactile and immediate experience. This may be worth all of the potential cons to some people but not of course to everyone.

It is hard to compare shops in an actual jeweler's store and you will be under a certain level of time constraints. The salespeople may be on commission so they may tend to be pushy in their attempts to make a sale.

One final factor to consider is that there is a difference between a large chain jewelers and a mom-and-pop store. You may get cheaper prices at the big chain store but the diamonds may not have the same quality. You will almost certainly get better customer service if there are issues from a more independent jeweler.

So if you are set on going with the physical jewelry store option, keep it local and independent. If you go with a chain store you may as well shop online.

Diamond Wholesalers

These are few and far between but you can find them in a number of major cities such as Los Angeles, Chicago and Philadelphia. The big wholesale diamond district however is in New York city. Known as the New York City diamond district it is located on West 47^th between 5^th and 6^th Avenues.

It has the largest concentration of wholesale diamond merchants in the US much larger than the ones found in other cities. They generally sell to the retail jewelry stores for the most part but are often willing to sell to the average Joe off the street as long as their money is real.

This is not the most convenient method for buying diamonds unless you happen to live in a city that has a wholesale diamond district. It does give you the chance to get cheaper diamonds but it is a more clinical buying experience so the romance of buying in person is lost.

These wholesalers usually sell to retail jewelers so they do not need to try and blind their customers with pomp and finery, it's purely transactional. So no velvet pillows, small talk and cups of coffee.

Verified Online Diamond Jewelers

There are plenty of quality well respected online jewelers out there such as James Allen, Blue Nile and Brilliant Earth. They have got online diamond sales down to a fine art and sell thousands daily with countless happy customers to attest to their validity as a dealer.

This is by far the most convenient and potentially cheapest way to buy a diamond as you can do it from the comfort of your couch. You can compare hundreds of diamonds and search based on your specific requirements and your budget.

You can shop without feeling rushed or steered by a salesperson toward certain higher priced options. You do however lose that certain romantic diamond shopping experience because although they have attractive elegant looking websites they don’t have the pomp and circumstance of a physical jewelry store.

Unverified Online Diamond Jewelers

We have left this option until last with good reason because honestly it should be considered the last resort in diamond buying. Unverified online jewelers often offer discount prices which seem too good to be true and frankly they usually are.

These sites do noy usually have high quality 3D images of the diamonds and most often they do not offer any official grading information for the gems either. This is a really risky way to buy diamonds as you may be getting ripped off with a very poor quality piece.

These unverified online jewelers tend to be the more low-end companies or auction sites like eBay. Honestly this is not a smart way to buy diamonds in my opinion. They may seem like a bargain but there is a risk of the diamond being poor quality, fake or never arriving at your door.

If you must buy online use a verified dealer who can supply a legitimate grading report. It may cost a little more but you know that you are getting what you paid for. People will try to scam each other at an alarming rate and when it comes to diamonds that is a lucrative business for scammers.

Building and Buying an Engagement Ring Online

We often think of buying an engagement ring as involving a trip to a jewelry store or three to see what they have made up in their inventory. Hoping to find one with the perfect setting and a beautiful diamond. For many people it is just like that but there are options.

You don’t always have to buy a ring that has been pre-made; some jewelers can show you diamond options and setting options to help you build one that is more personalized. This option especially extends to online websites like James Allen, Blue Nile and Brilliant Earth.

It can be a fun and convenient way for you to craft the perfect engagement ring for your hopefully future spouse. The process is often made very easy through online websites who can often walk you through all the important steps.

Prepare to Be Tempted

We have said earlier in this article that one benefit of shopping for diamonds online is much less sales pressure and this is still true. There is no salesperson trying to upsell us and use clever sound bites to make us spend more than we want. This does not mean the online sites don’t have their ways of upselling.

We are dealing with salespeople when we use these websites we just never see their faces. There are a few rules to remember before we start this process which will be important to making sure we not only get the best deal but we also get a quality end product.

If there is no 3D imagery of the diamond you are wanting to add to your engagement ring don’t buy it. This is your one and only chance to see what the diamond actually looks like.

Ensure that the diamond has an official grading report from one of the three main labs GIA. AGS or IGI. These are third party labs who have no skin in the game so their assessment of quality can be trusted.

Don’t opt for an off the shelf ring, you will want to choose your own diamond to make sure that what you have is of acceptable quality.

Remember as we have said diamonds do not fluctuate in price a great deal so sudden “hurry up sales” to get you to settle on a particular piece should be ignored. They would only offer a discount if the diamond was already overpriced to begin with.

We should note here that offers on settings are more likely to be legitimate as precious metals can fluctuate in price. The diamonds however will not so never take sudden discounts on a diamond move on to another piece or website.

Don’t Fall for Fakes

There is nothing more heartbreaking than someone discovering that the diamond they thought they had is a complete fake. It happens all too often and can be the result of customers not knowing what to look out for and sellers being very persuasive.

Now if you are using a reputable jeweler with an excellent reputation there should be nothing to worry about. Sometimes though you get the rogues of the industry who will take the risk in passing off fake goods.

There are a number of ways to spot a fake using pretty simple tests including:

The Scratch Test: To do this test you really need the diamond to be free of its setting as if you do it while still in the ring it may damage the prongs. Using a sheet of glass you can scratch your diamond across the surface. If it cuts the glass then it is a real diamond.

Diamond is a very hard substance so it can easily cut into the surface of glass. Diamond substitutes like cubic zirconia and moissanite can not do this.

The Fog Test: This is a really easy one you simply try to use your breath to fog up the surface of the diamond. If it clears up in 1 – 2 seconds you have the real deal. However if it takes 3 – 4 seconds you may have a fake on your hands.

The Transparency Test: This test requires a clean loose diamond and a newspaper. You simply place the diamond over some text in the newspaper facedown with the pavilion facing up. Looking through the diamond if the test is blurry you probably have a real diamond if you can read the text however it may be fake.

The Float Test: Some fake diamonds float in water but real diamonds are just too dense to float. So if your loose diamond sinks to the bottom of a glass of water then it is possibly real. If however it floats it is most definitely a fake.

__The Heat Test: __This is a more hardcore test for the diamond which only a real one will pass. The diamond should be loose. You will need some long handle metal pincers, a glass of cold water and a lighter.

Holding the diamond with the pincers uses the flame from the lighter to heat up the diamond for 30 seconds. Immediately drop it into the water if it is unharmed you have a good one if it shatters then it is no diamond.

Buying the Diamond

Set a Budget

Do you know who started the tradition that you should spend at least 2 months salary on an engagement ring? If you guessed a diamond company then you are a smart cookie because it was indeed invented as part of an ad campaign.

Many jewelers still push this concept obviously because business as they say is business. In truth though frankly you should spend as much as you want to or can afford to. Basing the level of love on what a person is willing to spend to my mind is never a great way to start out a life together.

The ultimate aim is to find an engagement ring that your future spouse is happy with and that will last for a lifetime and perhaps beyond as an heirloom of the family. If you have the means to be extravagant then that is entirely up to you.

If you must work to a budget there is nothing wrong with that, in fact it is not uncommon for couples to upgrade the engagement ring at a later date. James Allen actually has a policy to address this whereby they will credit 100% of the original purchase price of a ring purchased from them if you upgrade at a later time with them as well. The upgrade however must be worth at least twice the value of the first ring to qualify.

Choose the Setting First

Even though your diamond or diamonds will be the focal point of the engagement ring it is important to establish first what setting you will be getting. It is key to the aesthetic of the completed piece and may inspire the size and shape of the diamond you ultimately purchase.

You can choose a simple setting which draws the focus to that sparkly beautiful diamond or you can choose to go a little more ornate with decorative metal work and settings for additional gems. These two options have their own benefits but both can be tremendously attractive.

Solitaire Settings

You may have heard the term solitaire but do not know what it means when it comes to a ring setting. Quite simply it refers to there being just one single diamond set into the ring. This allows for the more inexpensive setting options generally starting in the $250 range and up.

The best material for a basic solitaire setting is 14K gold as not only is it striking to look at but also conservatively priced and durable. Lesser gold such as 10K can look drab and really ruin the look of a ring setting.

Now you might imagine that 18K gold would be even better but in truth the two do not differ greatly in appearance but the 18K is softer so more easily damaged. It will also be more expensive so really in terms of quality and value a 14K gold setting is a perfect option for a solitaire diamond ring.

Decorative Settings

Some people may wish to try and accentuate the beauty of the diamond by using a more complex setting such as Pave and side-stone. There is a huge variety of setting options out there and you can find them on jeweler websites like James Allen, Brilliant Earth and Blue Nile.

You can search through and save some of your favorites as you go, allowing you to narrow down your options later. If you are trying to stick to a budget you may find the decision easy but if you have more to spend you may be more particular and take longer to make your final decision.

You can find settings with ornately patterned metal work and even find ones with space to add smaller diamonds or other gemstones. Your personal taste and creativity can lead you to building something truly breathtaking.

Choose Your Diamond

Once you have settled on a particular setting the final step is to choose the hardware that is going to be mounted in the setting. This may be a single diamond or multiple with other gemstones also being an option.

Be cognizant of your budget for these gemstones and search your options accordingly. As mentioned earlier there are four main aspects to the price of a diamond: carat, cut, clarity and color. You should enter this phase of building with a concrete opinion of what matters most to you.

If you want a big diamond you may have to sacrifice cut quality, clarity or a perfect color. If size is not important you can choose something a little smaller that is more perfect visually. Acquaint yourself with what certain terms mean with relation to diamonds so you can make an informed decision on the gemstones you see.

Refer back to the sections of this article regarding the four C’s to get an idea of what some of the terms you will see related to diamonds will mean. As an example a diamond of 2 carats rated D for color, F for clarity and excellent for cut would be very valuable.

This is because the diamond has decent size, has flawless clarity, is colorless and has been expertly cut by a craftsperson to be symmetrical and have optimum sparkle and fire.

Pick a Shape

There are plenty of shape options when it comes to diamonds so take a good look at those 3D pictures they offer on the websites. Try and find a shape you see as pleasing and perhaps make a short list of options.

Take Your Time

The beauty of building your ring online is that you can take your time. There is no salesperson trying to push you to make a decision so you can often afford to sleep on it for a little while. You should be aware however that each diamond is unique so if you find one you really love you should lock it down. There will only be one diamond that is exactly like that in the world.

Buy Your Ring

Once you make your decisions with the help of the handy engagement ring creation tools all that is left is to make your purchase. It may take a while for you to get the ring as they now have to put it together for you.

Once you finally receive it if you went through a reputable company all should be as advertised but you may still want to use a jewelers loupe to check you got the same diamonds you ordered. This is especially suggested if the company has questionable origins. As the saying goes “buyer beware.”

Final Thoughts

The process of buying diamonds as a single gemstone or part of an engagement ring can be complicated for those who do not know that much about these gemstones. Hopefully our guide has given you some valuable information to work from.

You don’t have to be an expert in diamonds to get a quality gemstone; a little knowledge can go a long way. If you remember just one thing from this article let it be the term grading report. Those three gemology labs do the job of assessing the diamonds for you so be sure your diamond has an official grading report.

Reference Diamond Size Chart

If you use any of the definitions, information, or data presented on Diamond Size Chart, please copy the link or reference below to properly credit us as the reference source. Thank you!