Valuing a diamond ring comes down to estimating the value of the metal in the band and the price of the diamonds set in it. Let’s see how each of these components can be evaluated.
Calculating the Value of Diamonds
Valuing diamonds starts with establishing their quality level, which will be the basis for estimating their retail market price as part of new jewelry, and then, their resale value as pre-owned stones.
Determining the Quality of Diamonds
The value of a diamond is determined mostly by its four major quality characteristics, or the 4 Cs: color, clarity, cut, and carat.
If a diamond comes with a certificate, in which these features are assigned values and grades, evaluating the stone’s quality and comparing the diamond with other stones becomes relatively easy.
So, the starting point in calculating the value of a diamond should be figuring out its quality grades.
If the stone is not certified, you can have its quality evaluated by a gem lab such as the GIA (Gemological Institute of America) or AGS (American Gem Society), which can issue a grading report for the diamond for a fee.
Determining Diamond Market Price
The most straightforward way to figure out the market value of a diamond is to check the prices of stones with the same carat weight and of the same clarity, cut, and color grades.
You can do your research online and calculate an average price, which will serve as an estimate of your diamond’s value.
For example, if the stone in your ring has G color, VS2 clarity, Good cut, and weighs 0.75 carats, look up a number of loose diamonds with the exact same characteristics and average their prices.
This is how you will arrive at a reasonable estimate for the retail price of your diamond.
For example, check out the prices for the loose diamonds sold by James Allen – they are a pretty good indicator of the retail diamond market prices you’re likely to see at most vendors.
Determining Diamond Resale Value
The retail market price of your diamond is not the price you can sell it at. Buyers of diamonds, such as jewelry stores or diamond dealers, won’t pay you retail price when they can buy the same stone at wholesale value.
Wholesale prices are also not a good indicator of resale value because you will most likely get less from jewelers or dealers.
They don’t have a reason to pay you as much as they pay their suppliers because, unlike them, you cannot provide guarantees and warranties, favorable financing arrangements, marketing support, and other extras that wholesalers bring to the table.
A reasonable estimate for how much you could sell your diamond for would be from around 20%-30% of its current retail price up to around 60-70% in the best-case scenario (80% if you’re really lucky).
If you sell the stone to the public (e.g., through online classifieds or auction websites), you might get between 30% and 80% of retail value.
These ranges are so wide because prices can vary significantly depending on where you sell and to whom. For example, a pawn shop will most likely make you an offer at the low end of these ranges (or even below).
If you simply want a bigger diamond, you don’t need to sell the old one, however. Many diamond retailers such as James Allen and Brian Gavin Diamonds offer the option to upgrade your old diamond for a new one (usually provided the new stone purchased is more expensive).
Calculating the Value of the Band
The other component of the value of a diamond ring is the band’s price, which depends mostly on the metal used to make the ring.
In general, to determine the value of a band, first you need to find out what precious metal it is mainly made of – e.g., gold or platinum.
Then, you need to establish the purity of the precious metal – for example, gold that is 14 karats contains about 58% pure gold.
Next, you can weigh the ring (excluding the weight of any stones), and knowing the purity of its alloy, you can determine how many grams or ounces of the precious metal you actually have. For example, if you have 100 grams 14-karat gold, then the actual amount of pure gold in it should be around 58 g (58% purity).
When you determine how much pure precious metal your ring contains, you can look up the prices per gram or ounce quoted by dealers who buy such metals.
These quotes will be lower than the market price of the metal on commodity exchanges – for example, scrap gold dealers usually pay about 60%-80% of the market price of gold.
To see how the calculation of a diamond ring’s value works in practice, consider the following example:
Suppose you have an 18K yellow gold ring with one 1-carat round diamond of VS2 clarity and H color, and with a cut grade of Very Good (all grades are on the GIA scale).
Let’s say that after looking up a number of diamonds with the same characteristics online, you find that most of their prices fall within the $6,300-$6,800 range, and their average price is $6,500, which is a reasonable estimate for the retail value of your stone.
If you sell it to a diamond dealer or a jeweler, you can expect to get paid about $1,300-$1,950 (20%-30% of the retail price).
You might be able to sell the stone for as much as $3,900 (60% of retail value) if you try selling directly to the public (at an online auction, through an ad, etc.), but that’s not a given. The price might vary considerably depending on how you market the stone.
Next, you need to estimate the value of the band. Suppose it weighs 8 grams. Since 18 karats equals 75% purity (18 divided by 24), the pure gold you have is 6 g (8 g x 75%).
If the current gold price on commodity exchanges is $40 per gram (a completely made-up number for the purpose of illustration), then the market value of your gold is about $240 (6 g x $40).
You are most likely to get between 60% and 80% of this value if you sell to gold dealers, so the estimated price range for the band should be $144-$192.
When you add together the prices you are likely to get for your diamond and gold, it turns out that your ring is worth between $1,444 ($1,300+$144) and $2,142 ($1,950+$192) – this is the range its price will most likely fall into if you sell the diamond and gold separately to dealers.
You might be able to get more for your ring if you sell directly to retail buyers, but it is hard to say how much.
Some jewelers might offer you a deal whereby you exchange your stones or the entire ring for new jewelry and pay a part of the price in cash. In such a case, the store will likely give you a better price for your jewelry than if you sold it for cash only.
Where to Buy a Diamond Ring?
For diamond rings, we highly recommend James Allen (read our review) because it shows real photos and videos for each diamond so you can take a 360-degree look at any stone before having it set in a ring.
For colored diamonds, we recommend Leibish & Co., which specializes in fancy color diamonds (use code JewelryNotes200 at checkout to get a 5% discount).
Also read our Diamond Buying Guide and check out our selection of eye-clean diamonds that we've vetted for quality.