Rappaport method of pricing - Diamonds

Jewelry Discussion
1

Hello all, Long time lurker here. I have a friend who is about to pop
the question to his beloved and although other options were discussed
she has expressed interest in a diamond engagement ring. I know that
there are those out there that think a diamond is not the end all be
all, but in this case, it is. :slight_smile:

That said, I really don’t know much about diamonds and I would like
to help him with a question. This is from him directly:

"what do you know about the Rappaport method of pricing? I went to
a place on sunday and had about an hour-long discussion with a
jeweler, and think i’d buy from him, but want to put a few questions
to you if i may.

he showed me a one page with several matrixes. Each matrix was for
a specific size range (i.e. .70-.79; .80-.89, etc.) listing diamond
color along the left column, and clarity on the top, and then gave a
price per carat. How reflective is such a pricing scheme relative to
what I should hope to pay? I understand you will see large
fluctuations if it is poorly cut vs. well cut; but i’m hoping to
understand this method a little better and how i should compare what
i’m willing to pay in relation to it."

Is there someone out there who knows about this Rappaport method?
Does the cut effect price that drastically? Are there any other
pieces of I haven’t even considered that he should know
when shopping around?

Thanks so much for any advice I might be able to pass on!

Elizabeth

2

Hi Elizabeth, the Rappaport report is a price survey conducted by
Martin Rappaport every week. When buying or evaluating a diamond ,
I will usually find the stone to be 20% average below Rappaport, 10%
below for a “ideal make”, 30 to 50% below Rap for a poorer make. The
pricing in Rappaport is based on what the dealers on the street in
N.Y. are getting for their goods, that week, prices are changing
everyday right now on certain goods, these are wholsale prices, what
the jeweler is going to pay, he then adds his markup or profit to
that. Profit varies from jeweler to jeweler depending on their
needs. Quality of cut is the single most important factor in
selecting a diamond,if a diamond is well cut the stone will allways
face nicely, even after a period of neglect. The stone should be
viewed loose, I will usually show 3 to 5 stones close to the same
size, and the same shape, under normal lighting conditions, and you
can allways see simply the pretty stone, the most brilliant, the
most even dispersion of light. But when it gets down to it the most
important thing is whats behind the purchase, Love never fails.

Paul Bensel, Paul Bensel Jewelers , Yuma, Az

3

Elizabeth,

Now here is an easy question. No one in the industry pays the price
quoted by Rapaport in the “Rap Sheet”. Its all about the percentage
“back of rap” and that varies with supply and demand. As you suggest,
finely cut “ideal” cut diamonds will sell at a smaller percentage
“back of rap.”

Richard
http://www.rwwise.com
For Information and sample chapters from my new book:

4 
    Is there someone out there who knows about this Rappaport
method? Does the cut effect price that drastically? Are there any
other pieces of I haven't even considered that he
should know when shopping around?

Rappaport is merely a price guide, not a method of evaluating how
well or poorly a diamond has been cut. More to the point, “Rap”
sheets give prices more tailored to the type of cut, or shape of the
diamond’s outline, along with color and clarity grades. At the
moment, round, princess and step cuts are the most popular and will
cost more per carat than marquise, pear and other fancy shapes.
Also, Rap is a wholesale price guide that gives advice to retailers
concerning what their cost should be from a dealer. Retail pricing
can be anywhere from 40 percent under Rap to 100 percent above,
depending on your retailers’ source and other factors.

Another factor to be considered is proportions. Table size, depth
percentage, crown angle, pavilion angle, etc., will usually make a
difference in the amount that a dealer will want for a diamond, with
all other characteristics being the same. Rap sheets don’t contain
this info. But most price guides have a section with guidance about
adding or subtracting for ideal cuts and poor proportions. Often, a
lab cert can bump the price up a bit. GIA, EGL and others may have
provided a cert for stones, usually over one carat, and the labs
don’t do that for free.

If you really trust your jeweler, the best way for the person who
has not studied diamond grading is to look at every stone in your
price range, pick the one that looks best and buy it. If, on the
other hand, you don’t trust your jeweler, find one that you do trust
and conduct your business with that one. I understand that most
people want to be able to go to a website these days and learn all
there is to know about gemology and diamond buying so they can make
informed decisions about their purchases, how to buy gems to make
jewelry, etc., but the truth is that it takes specialized education
to be good enough at it to where you don’t make costly mistakes. As
in finding a professional doctor you trust, find the professional
jeweler you also trust. Make sure (s)he has the academic credentials
(s)he needs to serve your purpose. After all, you wouldn’t want an
M.D. who hasn’t made a study of anatomy to operate on you, would
you?

Some of our clientele are receptive to estate diamonds, which can
often be a very big savings to them. Many, however, do not want a
“used” diamond. I never have understood the problem with it, but I
do understand that a lot of people are superstitious. If your friend
can get over it, an estate stone in a new mounting may be a very
cost effective alternative.

Best,
James S. Duncan, G.G.
(AKA James in SoFl)

5

Elizabeth,

Yes cut does play a factor in the pricing of Diamonds. As for the
Rappaport price sheet they have a disclaimer at the top that states
“Poorly made stones often trade at huge discounts while well-made
stones may be hard to locate and bring Premium prices.”

They also state that the “prices on the sheet reflect high cash N.Y.
asking prices.”

In fact wholesale prices as compared to what is on the sheet, even
for excellent cuts are going to be any where from 10% to 40% below
these prices.

That said I am not a fan of buying a Diamond based on grading
reports or price sheets alone. Each Diamond is an individual and
even though two Diamonds may have exactly the same cut, clarity and
color grade they could be worlds apart in appearance.

The best advice as in any purchase is to shop around, look at lots
of Diamonds and then decide what is the proper price to pay.

Good Luck
Greg DeMark
email: greg@demarkjewelry.com
Website: www.demarkjewelry.com
Custom Jewelry - Handmade Jewelry - Antique Jewelry

6 
 Each Diamond is an individual and even though two Diamonds may
have exactly the same cut, clarity and color grade they could be
worlds apart in appearance.

I’m not quite sure I can agree with you here relative to the cut. If
two diamonds are cut to the same proportions (the only exception
with this is if one is strongly fluorescent) they should pretty much
look exactly alike. I sell only ideal cut diamonds (except when
matching some dreck somebody got elsewhere) and they are uniformly
more brilliant across the board than any stone that isn’t ideal cut.
Since the proportions a diamond is cut to directly effect the
brilliance and fire in a stone it would be pretty hard to say that
two stones with exactly the same proportions (again read the
exception for highly fluorescent stones) are going to look very
different especially if they have the same color and clarity. Every
once in a very great while you might see a stone that doesn’t quite
“pop” the same way but I have only seen one or two ideal cut stones
in the last 20 years that don’t.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
@Daniel_R_Spirer

7 
    That said I am not a fan of buying a Diamond based on grading
reports or price sheets alone. Each Diamond is an individual and
even though two Diamonds may have exactly the same cut, clarity
and color grade they could be worlds apart in appearance.

Thanks, Greg, this is what I was trying to say in my last post to
this thread. Price sheets have little to do with the actual
appearance of a diamond or any gemstone. If your jeweler is
reputable, pick out the best looking gem you can afford and pay for
it.

I’ll anticipate the next question, which is “Okay, so how do I know
my jeweler is reputable?” Well, to answer that question, you have to
ask a lot of other questions. A jeweler or gemologist who has
completed a course of study has a good start, and should have their
credentials available, but academic education isn’t enough by
itself.

“Hey, how long have you been in business as a jeweler?” is a great
question to ask. I am fortunate enough to work in a small
mom-and-pop jewelry store that was established in 1942. I, myself,
am a working Graduate Gemologist, but my store’s owner got his G.G.
in Residence at GIA over 25 years ago. He’s been buying, selling and
appraising for all that time. He also completed the M.G.A. (Master
Gemologist Appraiser) program many years ago. Basically, I’m saying
the guy has as much practical experience as anybody. With the 25
years he has in the business, our customers feel perfectly confident
in our company’s abilities to not only buy for them, but sell their
estate pieces, custom design new ones and appraise everything from
new to period jewelry.

Because of our store’s education and experience, many jewelers in
our area who get estate pieces or stones on memo will bring them to
us to grade. Just yesterday, a store owner brought an EGL certed
stone that he has on memo to us because the color grade didn’t seem
right. Turns out that when compared to our masterstone set, it was
off by two color grades. It is a neverending source of pride to me
that my colleagues in the trade come to us for this kind of advice.

The point of all this isn’t to brag (well, maybe a little), rather
to illustrate that there are jewelers, and then there are jewelers.
Find a reputable one and take his/her advice. Chances are that other
jewelers/gemologists in your area already do just that.

James S. Duncan, G.G.
James in SoFl

8

I would have to agree with Daniel on this topic. To generalize that
there can be a world of difference in appearance amongst diamonds of
a particular grade and cut is a real stretch.

Fluorecense is definitely a variable and polish can also affect
appearance, but to say that diamonds of the same grade and cut can
be worlds apart is also to say that grading has little meaning.
Furthermore, in a qualified certification, mention of the foregoing
attributes would be a necessary component of the document thus
setting the stone apart from the others. The suggestion is that
where grades coincide and appearance doesn’t somebody has made a
mistake. For example, I wonder how many of you do appraisals in
natural north light ? Also, how many appraisers limit their
activities to morning hours when their visual acuity is at its’ best.
Then again, how does one quantify the effect of the stones being
mounted , or for that matter, how does a mounting compare in effect
between white and yellow metals.? I doubt that appraising will ever
be an exact science unless we develop a machine that performs all the
functions of the appraiser and does so within strict parameters.

Ron Mills, Mills Gem Co.Los Osos, Ca.

9 
    Fluorecense is definitely a variable and polish can also
affect appearance, but to say that diamonds of the same grade and
cut can be worlds apart is also to say that grading has little
meaning.

Ron, if by cut, you mean the shape (round, marquise, pear, etc.), I
have to agree. But if you mean finish and proportions, I strongly
disagree. Not to say that ideal cuts may have bad F&P because they
don’t. I mean poorly proportioned stones. After all, if poorly
proportioned diamonds looked as good as ideal cuts, they would cost
as much.

    For example, I wonder how many of you do appraisals in natural
north light ?

For consistency, I learned to grade all gemstones under a grading
lamp.

    Also, how many appraisers limit their activities to morning
hours when their visual acuity is at its' best.

You’ve got me there, man. Sometimes divorce attorneys, banks and
insurance companies are in a hurry and need it immediately. If they
bring the request at 3:00 p.m., It has to be finished, photos
included, by closing time.

    Then again, how does one quantify the effect of the stones
being mounted , or for that matter, how does a mounting compare in
effect between white and yellow metals.?

To clarity grade a mounted diamond, one need only look for
inclusions in facet reflections. This method, taught by GIA and
other schools, works for prong, bezel, pave or any type of mounting.
For color grading, I have one yellow and one white metal temporary
mount for my masterstones. That gets me close enough.

    I doubt that appraising will ever be an exact science unless we
develop a machine that performs all the functions of the appraiser
and does so within strict parameters.

I certainly can’t argue with that, Ron. Even gem labs don’t match
each other’s grading reports. I often wonder how many graders a
diamond must be evaluated by at GIA’s Gem Trade Laboratory until the
requisite three people have agreed upon it’s grade so a cert may be
issued.

No, it’ll never be an exact science, but once an appraiser has made
enough comparisons of stones to their certs with his/her own
equipment, they can be reasonably accurate. Accurate enough for the
insurance company, anyway.

James S. Duncan, G.G.
James in SoFl

10

Ron,

Lets now add internal graining and we have still another factor that
affects the way light is transferred back to the eye.

I stand by my statement that there can be a world of difference.

If you don’t take the time to look and you hold on to your current
beliefs you might as well not sell Diamonds. After all who needs you
if all Diamonds of a certain color, clarity and cut are alike.
Anyone would be able to buy a Diamond based on a report making it
no different than buying any commodity.

Greg DeMark
email: greg@demarkjewelry.com
Website: www.demarkjewelry.com
Custom Jewelry - Handmade Jewelry - Antique Jewelry

11

I would have to agree with Greg, in that you cannot buy a diamond on
a cert alone, each diamond is speacial and each diamond is different.
I am forced to deal with this fact everyday. If I attempt to sell a
stone to my supplier in N.Y., and I fax him the cert he may make a
ballpark estimate of what I can get but he will not be close to being
firm until he sees the stone, he knows what he is doing . Let me
relate a experiance from just this week, this gal is looking for a
3ct. plus stone, I get in a 3.40 VS-2, F color GIA, cert, and also a
3.26ct. SI-1, I color, GIA cert, set the 2 stones side by side, both
stones are within ideal cut parameters, the 3.26 faces much
brighter, 3 solid color grades , and 1 clarity grade difference, and
the less expensive stone still looks better, the problem is that the
3.40 has a slight cloud at bottom by the cutlet, and it reflects
around the stone causing the stone to look just a bit hazy,it still
recived a VS-2 grade from GIA, I was able to see the haze when I
first opened the paper, my client may not have seen this haze in a
non-comparative situation. There is a 25,000.00 wholesale cost
difference bettween these stones, I dont care what the cert says,
for that kind of money I dont want haze.

Paul Bensel

12

Greg,

I’m the one who objected to your first statement (about similarly
cut stones looking different) and I stand by it.

 If you don't take the time to look and you hold on to your
current beliefs you might as well not sell Diamonds.

I’m sorry but I spend a whole lot of time looking at diamonds (just
about every day for more than 20 years), both at the ideal cuts I
sell and the customer’s diamonds I appraise and work with on a daily
basis. Ideal cut diamonds, across the board, will look incredibly
similar to each other (again, fluorescence excluded–perhaps if there
were some very heavy internal graining it might have some effect but
I haven’t ever seen one that had enough to impact an ideal cut). If
the stone is clean I can almost always immediately tell whether or
not the customer has an ideal cut diamond simply by how brilliant the
stones are compared to non ideal cuts. In all of the years I have
been selling branded ideal cut stones, I have never returned a stone
to my supplier because it didn’t look as good as any other one (and
you better believe that I’m way fussier than anyone else out there
since I stand behind my stones forever). I confess to occasionally
returning a stone because I wasn’t happy about the clarity grading or
the placement of an inclusion, but never because it didn’t look as
brilliant as all the others.

The commodization of diamonds has already happened in the marketplace
and nobody "needs you " as a jeweler if all they are looking for is
a loose stone. That is why it is so critical to set yourself apart in
some other way in the marketplace (like selling branded diamonds that
can’t be bought just anywhere, or branding yourself). I’m a little
surprised you aren’t aware of this as every custom jeweler I know now
deals with customers walking in with stones they bought on the
internet with a cert stating what it is, often including cut grading.
Since GIA is about to join the group issuing cut grades it is all
going to be just that much more of a reality too that your customer
can buy a diamond anywhere for the best price and be pretty damn
assured that they are going to get a stone that looks a certain way.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
@Daniel_R_Spirer

13

Paul,

Thank you for mentioning this scenario. Yesterday I replied to a
comment on this subject and referred to internal graining as one
more factor that can make a difference.

Internal inclusions play a major factor in the appearance of a
Diamond. Two Diamonds can have the exact clarity, color and cut
grades but look worlds apart in appearance because of the internal
mapping of the gemstone.

Two Diamonds can both be an SI1 but one stone has large inclusions
toward the center of the table in the stone and another could have
fractures near the culet or out in the crown facets. The way light
will split and scatter once it hits these different types of
inclusions and their placement will affect the way light returns to
the eye giving each Diamond a possible different appearance.

Unless you are strictly dealing in D color Flawless 0 cut grade with
absolutely no florescence Diamonds each can have a different
appearance based on the factors mentioned above.

Greg DeMark
email: greg@demarkjewelry.com
Website: www.demarkjewelry.com
Custom Jewelry - Handmade Jewelry - Antique Jewelry