Why do jewelers always want you to pay double the price for upgrading a diamond or an engagement ring?
The answer is simple:
Jewelers have to profit (at least a little), off their merchandise, otherwise they’d go out of business.
There isn’t a big markup on diamonds to begin with, and when you get into larger diamonds (over 1.00 carat), that margin gets slimmer.
Let’s look at an example:
Say you owned a 1 carat diamond (the dream carat weight). And say you have a 10 year anniversary coming up…
You want to upgrade that stone for 1.25 carat (and I’ll say SI1, E, since it’s the most popular color and clarity grade). 1.25 is a nice step up…
Take a peek…
(Prices from James Allen at the time of this post.)
You would think that trading a $6,500 diamond towards a $9,000 diamond would be a fine trade. After all, they are making $2,500 profit, right?
The cost on that $9,000 is probably closer to $8,000… So that leaves very little profit off such an expensive stone…
And there’s more…
That’s not actual profit! You still have to factor in payroll, overhead costs, commissions, labor and parts for setting the stone, sizing it… Certifying the diamond (reports cost about $300 each)…
Add that all together and chances are, you’d lose money.
“No, No, No,” you say…
“They’re still getting my $6,500 diamond!!!“
True. But that diamond didn’t cost $6,500, and that stone doesn’t pay the bills today. That diamond has to be removed, cleaned up, reset in a new mounting, possibly recertified, inventoried, and then it will sit in the showcase until it’s finally sold once more. Which could take months or even years (Just ask any jeweler, they have pieces in their store that have been there for decades!)
And if all customers did this…
The jeweler would be out of business quickly!
Just like any business, any place that allows trade-ins (think car dealerships), they have to continuously make some kind of profit off what they sell. Otherwise, why bother?
If they didn’t have a requirement or criteria to upgrade, people would want to trade a $6,500 diamond in for a $6,600 diamond.
In fact, some would trade it towards a cheaper stone, downgrading, and expecting money back.
You see how this could spiral out of control?
Jewelers are not in the business to do even exchanges. They have expenses (just like everyone). There is slim profit, and they have to work hard for that profit.
So they double up!
This assures them of constant money rolling in so they can pay the bills, pay the employees, and buy new merchandise to fill the store. It’s a necessary requirement!
But keep in mind:
Going back to the example… Not everyone will give you that full $6,500 to trade in your stone… You see, only the jeweler that you bought the diamond from will give you full trade-in value (and that price can’t be combined with a sales price either). You’d be pushing into a $13,000 diamond upgrade:
Just about every jeweler on the face of the Earth works this way. Double up, full trade in price; IF you bought it from them! Otherwise, the price they give you will probably be LESS.
Jewelers offer this deal to their own clientele, hoping to keep them as customers in the future.
But going elsewhere, they might only give you $4,500 for that same exact diamond.
So if you are trading in your diamond, there are a couple of things you should know:
1) Original Condition
Your diamond must be in the original condition (like it was when you bought it). Meaning; no chips, no cracks, no bearded girdles, no damage whatsoever. It must be “brand new” (and all diamonds will be “brand new” forever, unless you accidentally hit it, strike it, crack the side of it…)
If your previous diamond was certified (GIA, IGI, AGS, EGL…) then turn that diamond report in with the upgrade. This paperwork verifies the quality of the stone and will make it easier for the jeweler to determine value. If you don’t have it, you could get even less value, because re-certifying a stone costs money.
3) Expect a Bigger Mounting
Bigger stones can’t just be put into the same mountings or heads that your smaller stone was set in. It will have to be set into a much larger head (prongs) in order to be secure and stable. And if the larger stone won’t fit into your old mounting, or look balanced, or the old mounting is too frail and weak, then you’ll have to upgrade (purchase) a new mounting for your larger rock.
4) No Value for the Gold
When doing trade-ins, it’s important to note that prices are for the diamonds ONLY! Not the mounting (Gold, Platinum…) Just the diamonds can be reused (if they’re in perfect condition). The metal can’t! Metal will have to be scrapped, sent to a refinery, melted down and re-purified. So the value that jewelers give you when you trade-in (or sell) your goods, is diamond value only (and only diamonds, nothing for other gemstones either; ruby, sapphire, topaz, amethyst…)
So there you have it…
That’s the real reason why jewelers charge double the prices for upgrades.
And if you are trading in your diamond, before you do… Do yourself some justice: CHECK OUT JAMES ALLEN FIRST!
The reason; Their prices are so good (and so low) for certified diamonds, they will usually be BETTER than what most places can give you with your trade-in. Seriously! Look up the quality and size of the stone you’re interested in. See the prices yourself!!!
You’ll be amazed!
They do have the lowest prices online (and anywhere)!
Author Richard Scott. Certified Diamontologist and Gemologist. 30 years of experience.
Let Richard help you choose the best diamond, the most dazzling engagement ring, and save as much money as possible. Read more about the author here. Follow Richard on social media; Twitter, Facebook, Pinterest. Contact Richard Scott here.