Suppose that you have a loose diamond or a diamond ring that you want to get rid of. Let’s see why selling your diamonds for cash might not always be a good deal, and let’s find out what other options you have.
How Much Can You Sell Your Diamonds For?
If you go to a jewelry store and try to sell your diamond jewelry for cash, chances are that you won’t be able to get more than 50% of its original value.
In fact, you’d be lucky to get half of what you bought your items for. In most cases, the price you will be offered will be around 10% or 20% of the retail price of your jewelry.
Why This Price?
So, why do jewelers offer such low prices for diamonds that are sold for a lot more?
The fact that your jewelry is used is only part of the reason. The truth is that jewelry stores don’t really have the incentive to buy your diamond jewelry at its retail price because they buy diamonds in bulk at much lower rates.
Does all that mean that jewelers make outrageous profits on diamonds?
Not really. Even if the wholesale purchase price of diamond jewelry seems low, it has to be marked up to cover the store’s expenses such as salaries, rent, utilities, advertising, etc.
Profit is only a small part of the retail price, and it is not worth it for jewelers to pay that much for second-hand jewelry.
Some Jewelers Don’t Buy Diamonds for Cash
Some jewelers will not buy your diamonds at all.
One of the reasons is precisely the low price they can offer you: It is likely to outrage some customers, who may never come back to buy anything from the store.
In addition, some stores don’t want to deal with the hassle of establishing the quality of the diamonds offered to them as the process involves additional time and money.
Trading In Your Diamond: A Better Alternative
Although selling your diamonds for cash may not be worth it for you, a noncash deal may prove to give you a better value for your stone.
If you exchange your diamond jewelry for another piece, then the store will most likely offer you a more lucrative deal.
The reason is that the new item you will get will usually cost more, and instead of paying you cash, the jeweler will receive some cash from you to cover the difference in value between the two items.
Evaluating a Trade-In vs. a Cash Deal
Let’s see how you can work out whether a trade-in deal would be a better option for you than a cash sale:
Suppose the diamond ring you want to sell was bought for $5,000. Say the jewelry store offers you 20% of the ring’s original price, i.e. $1,000.
However, you are told that if you trade the ring in, you will be given an allowance of $2,500 (50% your item’s price) to use against any purchase of new jewelry from the store.
So if you want to buy a new ring that costs $6,000, you will have to pay only $3,500.
In the above example, if you trade in your jewelry, you get a value of $2,500 for it than the $1,000 you would get if you sold it for cash.
The store actually makes a sale to you and gets $3,500 in cash plus your item, which can be sold for at least $2,500. Both you and the jeweler are better off than if you went with the cash deal.
Of course, if you need cash urgently, a trade-in deal may not work for you, so make sure to evaluate your alternatives before deciding which option to take.