People are really under the impression that Jewelers are Rolling in the Dough.
They think that Jewelry is very over-priced and that Jewelers are Making Tons of Profit from selling Diamonds!
So what gives?
Are Diamonds overly inflated?
Are Diamonds making Jewelers Tons of Money?
That’s the Answer to the Question!
No, Diamonds are not over-priced! No, they are not the Big Money Makers that everyone tends to believe.
What do Jewelers Make?
Jewelers will be lucky to make Keystone on Diamonds. (Keystone = Cost x 2)
So, a Diamond that costs $200, they’ll TRY to sell for $400!) (Then you still have Commissions and Overhead coming out of that Sale!) And what’s even more startling to most people, is this fact: The Bigger the Diamond, the Bigger the Price Tag… The Less Money the Jewelers will Make! (On a $5000 Diamond Sale, profits may be as little as $1000!)
More is Less
It’s true! The more Expensive a Diamond is, the Less Profit the Jewelers will make. Why? Because larger Diamonds (1.00 Carats and Bigger!) are Expensive to begin with. The costs on large Diamonds are Extreme. Market pretty much dictates certain Price Ranges and Margins to work with.
A 1.00 Carat Diamond, SI1 Clarity, G Color, G.I.A. Certified, will usually only be around 10% price difference from store to store (and actually James Allen has it selling for just $4,850). There’s just too much Competition to over-price Diamonds and be Greedy. If a Jeweler tried marking the Retail Prices up really high, it would back fire! They’d never sell any!
So, Jewelers have to keep them within Acceptable Limits. Plus, the market for really Large Diamonds is slim. How many people really Buy Large Diamonds? Which means, a Jeweler can’t Over-Charge! And Jewelers don’t like keeping Large Diamonds tied up in Inventory either. It locks up their Cash Flow and keeps them from Buying New Merchandise, or Marketing. So Jewelers are more apt to make Very Minimal Profits on larger Stones.
Diamonds are NOT the Awesome Profit Makers that make Jewelers Rich!!!
Diamonds and Diamond Deals are the things that get customers in the door. If it means just making a Couple Hundred Dollars on a One Carat Diamond, they’ll do it. Diamonds do no good sitting around in the Jewelry Showcases and Collecting Dust.
So then, if Jewelers don’t make huge profits on Diamonds…
What do they make their Profits on?
They make money on Mountings, Gold, Chains, and Gemstones. Things like these keep the Jewelers afloat. Especially in today’s economy.
It’s not like the olden days where Jeweler’s and every business could mark things up 3 times. Today, Jewelers work Hard and Struggle. They make Less Profits and do what they can to keep their existing customers, and attract new ones. But then, most companies are hurting big time right now. It’s just the way that it is. It’s a sad state all across the country and luxury items are no different.
So just because Diamonds are Expensive and Cost lots of Money, doesn’t mean the Jewelers are making Fortunes on them. More like a Couple Bucks here and there. Just enough to keep Paying the Bills, make a Decent Living, and Buy New Diamond Rings that you’re simply going to Love and Enjoy!
Now that’s the Real Deal! :)