Price vs. value. This can be another confusing concept. In my last post, I briefly discussed the difference between price and value of a diamond. While it seems to be a matter of great importance to know the exact grading qualities of a diamonds, and in this age of information, it’s so easy to research all of that, there is no doubt that a search for diamonds will come up with a myriad of information and pricing. This is because diamonds are NOT a commodity. There is no set price for what a customer would pay for 1ct G color, SI1 clarity diamond. Just as there is no set price for what I, as a retailer, would pay my vendors for that stone either. On paper, I’ve seen price differences of up to 25% on similar diamonds.
The price of an item is the amount of money that you will pay for a product. The value of that product is a little more subjective and obscure. Value is the buyer’s perceived worth of the item being sold. We all value different things, even on the same product. A parent of a 16 year old new driver might place more value the safety features of their child’s car more than how it looks. The 16 year old will probably put more value on what their friends think of is when they pull into school the next day. Lots of things play a part in the value of an item. Manufacturing techniques and quality craftsmanship, warranties, return policies, payment options, packaging, and brand name are just a few.
Jewelry is a great example of where it can be confusing. For example, if you are looking for a 14K yellow gold cable link chain, you’ll find a big range of prices. While you might think you’re comparing the same thing, there are a lot of different things that affect the selling price. How heavy is it? Is it handmade or machine made? What type of clasp does it have? Is there a warranty on it? And that’s just a few things to compare. Diamonds are the same way, but usually dealing with higher prices than a gold chain so it adds up faster. On paper, you can compare “identical” diamonds and see big price differences.
What other value factors are there to compare on diamonds? Here are just a few:
– How do they look in person? Is one more appealing to your eye? You know the old adage “Beauty is in the eye of the beholder!” Are you able to see it before you buy it? (That and more on the differences when buying a diamonds online in a future post.)
– What type of warranties come with your purchase? If it chips, will they fix it? Can I trade it in for a larger stone later? If so, is there a minimum price increase you have to pay? – What type of diamond grading report does it have, if any? Due to their stricter grading, reports from the Gemological Institute of American have a larger cost associated with them than do reports from the European Gemological Laboratory.
Only you as the consumer can decide if selling price of an item fits with your opinion of the product’s value. It is the job of the seller to build that value. Very few items “sell themselves.” After last week’s lengthy post, I figured I’d keep this one shorter. There is so much more that could be said on this topic like consumer buying habits, product advertising, premium pricing for brand names.
P.S. – There is still the most import thing about buying jewelry. Why are you buying it? What is the emotional connection? All these value factors are great, but it’s easy to lose the big picture. We’ll talk about that more in depth next time around. Stay tuned!