Carat magic numbers - why .7 and .9?

[NWD]

Hello everyone. I've been lurking here, doing the research. I've been working with Jonathan at GOG on an engagement diamond. I and my girlfriend have really enjoyed the process of getting educated. Thank you for all the super info here and for making me aware of GOG. Through Jonathan and Sarah at GOG, I learned that the big price jumps happen at the carat weights of 0.5, 0.7, 0.9 and then 1.0 and each quarter carat above that. Jonathan let me know that this is determined by market forces. Also that the price jumps are mitigated to some extent by the demand for the carat weights just under the jump points so that actual prices do not jump as dramatically as one would expect based strictly off the Rap sheet price jumps. I'm wondering if anyone has additional information about why the price jumps are at .7 and .9. This seems quirky. Are these numbers tied to some fact about diamond rough sizes or something specific? Or did someone just arbitrarily decide these would be the jump points? Why not at what would seem to be the more obvious choice of .75 carats? I could see people wanting to say that they had a 3/4 carat ring, but not that they had a .7 or a .9 carat ring. Why not .6 and .8? Just a point of curiosity for me. Thanks again for this fantastic website. -Nate

 

[diamondseeker2006]

Well, technically saying I have a .90 does sound more impressive than .88. So I think that is why the price jump numbers begin at the ._0 levels. It definitely saves to be in the .60's or the .80's rather than the .70's or .90's. I have done that a couple of times in relation to diamond earrings. And I see it all the time on here when people try to find .45's for earrings rather than .5's.

And of course, I have no idea how diamond pricing originated! Love Good Old Gold, too!

 

[NWD]

Thanks for the insight diamondseeker2006. Jonathan is a rock star for sure.

That's the confusing thing to me. If they are going to go with .7 and .9, why wouldn't they also jump prices at .6 and .8 or just do it at the quarter carat (.75) as they do above 1ct?

Finding out WHY the jumps occur where they do won't really affect my purchase. It is what it is, just caught up in the subject and thought it may be of interest to some Pricescope members.

 

[diamondseeker2006]

My guess is that since .5 is definitely one, it wouldn't make any sense to have a big jump at .6. And if the only other jump under 1 ct. was at .75, well, that would be one less jump than they'd get if they made it .7 and .9. I really have no idea. I am just speculating with you! But the .9 is there because it is highly desirable because it is so close to a carat. So I kind of see the .9 and so that leaves .7 halfway between .5 and .9. Just using logic I think it kind of makes sense!

I am sure some expert will come eventually and explain the history!

 

[Karl_K]

A lot of people seek light three quarters(.7+) and light carats(.9+) to save money over buying .75ct and 1ct therefor there is more demand for them than slightly lighter stones creating a price jump but not as much as full carat and full three quarters.
Light halves(~.45+) and light quarters(~.23+) have a similar but smaller jump for the same reason.
I say approximate on light halves and quarters because where they start is not universally accepted.
I have heard .21ct called light quarters by some jewelers.

 

[diamondseeker2006]

See, as soon as I said that, one came!

 

[John P]

A lot of people seek light three quarters(.7+) and light carats(.9+) to save money over buying .75ct and 1ct therefor there is more demand for them than slightly lighter stones creating a price jump but not as much as full carat and full three quarters.
Light halves(~.45+) and light quarters(~.23+) have a similar but smaller jump for the same reason.
I say approximate on light halves and quarters because where they start is not universally accepted.
I have heard .21ct called light quarters by some jewelers.

Good explanation.

 

[NWD]

Okay, thank you diamondseeker2006 and Karl_K. That all makes good sense. Here's a twist. The rap sheets I've seen have carat categories from .5-.69 and .7-.89 so my understanding is that there is no rap sheet price jump at .75. So what is the incentive to buy just under .75 carats if there is no rap sheet price jump at that point? Do vendors add on a .75 carat price jump of their own on top of the rap sheet jump because it is a natural jump point (people want to say they have a 3/4 carat)? If so, then why do the rap sheets have price jump points at the other "natural" jump points (.5, 1, 1.25, etc.) if there is none at .75? Wouldn't these natural jump points be skipped by the rap sheets and added on by the vendors as seems to be what's happening at .75? It seems that by the logic presented, the rap sheet categories should be more like this:

.5-.69 (at and just above .5)
.7-.74 (just under .75)
.75-.89 (at and just above .75)
.9-.99 (just under 1)

In essence, why is there no rap sheet price jump at .75?

Another question, why does the "under .75" category go from .7-.74 while the "under 1ct" category go from .9-.99? Why does the "just under 1 ct" category encompass a full .9 carats while the "just under .75" category only .4 carats?

In addition, above 1 carat, why isn't there a similar rap sheet price jump at the "just under each quarter carat" categories, e.g., 1.15-1.24 or 1.2-1.24. Is everything from 1 carat to 1.24 carats considered "just under 1.25 carats"? Or is it that once you get above 1 carat, people have enough money that they aren't going to even bother with trying to slip just under the quarter carat weights so that there isn't really a market driven demand for the "just under" weights?

Apologies if my digging into this seems too pushy to anyone. Especially for my first thread. I'm just interested and seek a more full understanding. Thanks for your patience.

 

[Karl_K]

Rap is just a pricing guideline that prices are based on +/- Rap.
There are a bunch of categories not reflected on RAP itself but real in terms of pricing.
For example .99 will tend to trade a bit more per ct than .98 on average.

Light thirds is another that I forgot to mention above and even weirder it goes from .30 to .32
A .29 would not be a considered a light third.

Looking for a lot of logic in diamond pricing will just lead to a headache.
So much of it is based on tradition and "its the way we always did it" is alive and well.

 

[NWD]

Okay Karl_K. Thank you for taking the time to respond.

 

[NWD]

I want to correct an error in my earlier info. There is NOT a Rapaport price jump at 1.25. Categories look like they are actually at the HALF carat between 1 and 2 carats and every FULL carat over 2 carat weight. 1-1.49, 1.5-1.99, 2-2.99, 3-3.99, etc. Apologies for the incorrect information.


Interesting to note that another price publisher I came across, the IDEX diamond retail benchmark appears to use different carat categories.

.5-.69
.7-.79
.8-.89
.9-.99
1-1.24
1.25-1.49
1.5-1.99
and each full carat over 2ct

 

[TC1987]

I'm not going to sit down and do all the calculations. But I suspect at least part of the reasoning behind the breakpoints, since we're talking about modern round brilliants here, has to do with "look." Diameter (or surface area), the face-up size of the diamond. If you lined up a bunch of "ideal" MRB round diamonds in a row, assuming all were "typical" diameter for their weight, might it be that the breakpoint carat weights are where one starts to observe "looks like a .75ct," "looks like a 1ct," etc? The .9 - .99ct, I could certainly see that, since .63mm isn't hugely different from 6.4-6.5mm. 5.6mm might not look too different from 5.8mm ,etc.

 

[bunnycat]

I'm not going to sit down and do all the calculations. But I suspect at least part of the reasoning behind the breakpoints, since we're talking about modern round brilliants here, has to do with "look." Diameter (or surface area), the face-up size of the diamond. If you lined up a bunch of "ideal" MRB round diamonds in a row, assuming all were "typical" diameter for their weight, might it be that the breakpoint carat weights are where one starts to observe "looks like a .75ct," "looks like a 1ct," etc? The .9 - .99ct, I could certainly see that, since .63mm isn't hugely different from 6.4-6.5mm. 5.6mm might not look too different from 5.8mm ,etc.

I can see the logic in that. It might also help explain why the jumps after 1ct are at larger intervals, because you have to add on a lot of extra weight to start seeing larger differences in accompanying surface area of the diamond. One day I'm going to sit down with hubby and work out the formula again and run the different measurements through a spread sheet to see how the surface area percents change over the different sizes. He figure the derivative do it in his head, but then he's a math professor...I need a calculator...

 

[NWD]

Breakpoints around perceived visual carat weights would make sense. I'm just not sure how this would be matched to the actual jump points. It seems like the start and end category jump points would start lower and go higher than perceived "important" carat weights e.g.,

.4-.65 look like .5
.65-.85 look like .75
.85-1.15 look like 1

or whatever size people decide starts to look like the next bigger "important" carat weight.

Instead we have
.5-.69
.7-.89
.9-.99

My theoretical categories are simplified. As indicated, effect of carat weight increases on perceived visuals may change as the carat weight climbs.

I emailed Martin Rapaport and someone at IDEX. I don't really expect a response. I wonder if anyone knows people at these places that would know something like this.

Simply a point of historical interest, I suppose. Thank you for the ideas.

 

[John P]

I want to correct an error in my earlier info. There is NOT a Rapaport price jump at 1.25. Categories look like they are actually at the HALF carat between 1 and 2 carats and every FULL carat over 2 carat weight. 1-1.49, 1.5-1.99, 2-2.99, 3-3.99, etc. Apologies for the incorrect information.

Actually, each published report notes that 1.25-1.49 may trade at 5-10% premiums over 1ct prices. In fact every category from 0.50-up has such a note about the top of that range trading at 5%-10% or 7-12% higher than the base of the range. But remember these are guidelines, and even the guidelines have guidelines...

For example, each report states on page 1 that Very Fine Ideal and Excellent cuts in 0.30-and-up trade at 10-20% over normal cuts.

Since GIA introduced their cut grade Rap has even published three cut specifications for round diamonds; determined by minimum diameter (per TC's comment) and ranges for depth, table, girdle, culet, fluorescence and comments. Rap states that his price list relates to fine cut RapSpec2 diamonds or better, and that 'triple excellent' and 'ideal' cut stones bring higher prices in some instances.

Of course color and clarity are also fluid: A low J (J-K border) brings less than high J (I-J border) and a low SI1 brings less than a high SI1.

So you constantly see many diamonds of "same" category such as (example) 1.01 J SI1, which can be 50% or more apart from each other in asking price within the trade... The price differences can get even more separated when retailers price them to consumers, depending on markup practices, purchase benefits, etc.

 

[NWD]

Thank you Mr. Pollard for the additional info. So no "hard" rap break point at 1.25, but a dizzying array of adjustments apart from the "hard rap break points.

 

[bunnycat]

For anyone who's interested, hubby and I worked up a pdf of two sets of data. The first set of calculations shows you the percentage increase in area (perceived visual increase) as you increase a stone size from it's original size. I hope these aren't too huge and are readable.





The second is a different way of looking at it and basically shows if you start at size x and go to size y, how much bigger does it look?

 

[Karl_K]

Since a lot of diamonds have been coming off of lists the terms light,full and heavy* are less common than they used to be but the historical practices still apply to pricing.
It is rather fun listening to an older jeweler talk in the old school trade jargon it is another language.
I notice that a lot of the younger jewelers(and many young at heart) have dropped much of it.

*A heavy carat would be for example: approximately 1.02 up to around 1.14.
At times a heavy would sell for less per ct than a full because a lot of jewelers refused to pay extra for them over a full. ie: 1ct and 1.05 would be the same cost. Not anymore on a small order.
These days a lot of contract stones are sold this way to the chains, they will specify 1000 stones 1.0-1.05 at $$$$$ per stone.
Their accounting and manufacturing will not tolerate the variation in number that would come by buying by weight. If they ordered 1000ct they would not know the exact number they bought, which drives accounting departments crazy.

 

[NWD]

A gentleman at IDEX was kind enough to email me right away with this information about the carat weight categories they use and agreed to let me post it here:

<<In a nutshell: We defined our category ranges based on market data and market behavior which we see on IDEX online trading platform with more than 500,000 daily data points. Specifically, we identified areas where there are price premium jumps AND diamond availability disconnects. For example - let's look at the more obvious area of 0.99 points vs. 1.00. There's a strong statistically meaningful price premium of diamond in a 1.00+ range compared the .0.95-0.99 so that is one 'clue'. IN ADDITION, you see it also in diamond availability numbers - There are MUCH MORE diamonds - the difference is in order of magnitudes - in the market that are 1.00+ compared 99 pointers. So for example, there might be 1,000 diamonds that are exactly 0.99 carat, but 100,000 diamonds that are exactly 1.000. So that tells us the the market 'prefers' 1.00 over 0.99 in a way the impacts their diamond cutting decisions.
In some break points you see this phenomena more pronounced than others. Specifically to your question - you see it also in the .6 are but much, much weaker. Since we wanted to cover as many carat ranges and issue a one pager and not a 'book' we included the breaks that are more pronounced.

Hope that helps>>

I was pretty amazed that this gentleman took the time to get back with me. Still curious as to why the market doesn't dictate a price jump at .75, but the market is what it is. Many thanks to this gentleman and the members who shared info on this thread.

 

[Karl_K]

kewl glad you heard from IDEX.

 

[diamonds-are-friends]

great discussion. are there anymore jargons that people in the trade use to describe higher carat weight stones?

say for example, heavy carat refers to a stone with approximately 1.02 up to around 1.14.

what about those in 2 carat, 3 carat sizes?

do they use similar nomenclature?

like heavy 2 carat for 2.02 - 2.14?

 

[John P]

<<...There's a strong statistically meaningful price premium of diamond in a 1.00+ range compared the .0.95-0.99 so that is one 'clue'... So that tells us the the market 'prefers' 1.00 over 0.99 in a way the impacts their diamond cutting decisions... >>

It is a reasonable but predictable answer. I've had the same conversation with Martin Rapaport and he answers in the same way. While very politic, ultimately this is a chicken-egg proposition:

Rap says his list is a guide, based on actual trade asking-prices per gathered data, and that actual transaction data is driving the bus. Meanwhile the trade argues that - since his guide has such a large footprint - it is what drives the bus.

Rap: "We just report what the market is doing."
The Market: "We're forced to use Rap pricing like everyone else."

Does anyone else remember the 2008 Rapaport Group Breakfast Meeting at JCK? It got pretty explosive, with attendees taking the microphone and accosting Martin Rapaport on this very topic. Why? Because the Rap list had gone up significantly just prior to the show. It threw pre-planned deals into chaos. Buyers who came with major deals in-mind were confronted with sellers demanding new, higher pricing than had been promised, as a result of the sudden hikes to Rap's list.

Buyers: "Wait, wait, wait. We can't pay this new pricing!"
Sellers: "Sorry, but the new prices are published right here - now pay up..."
The Market: "Rap, what is going on???"
Rap: "We just report what the market it doing."
Chicken: "Egg!"
Egg: "Chicken!"

 

[John P]

For anyone who's interested, hubby and I worked up a pdf of two sets of data. The first set of calculations shows you the percentage increase in area (perceived visual increase) as you increase a stone size from it's original size. I hope these aren't too huge and are readable.

These are cool charts. The percentages are interesting in terms of diamond cutting strategies and weight loss/yield, which is relevant to any discussion of why "magic weights" exist as-they-do.

This is probably as good a time as any to caution people not to strictly correlate SIZE (mm diameter) to CT WEIGHT. For example: While Bastetcat's charts indicate that 6.4-6.5mm correlate to 1.00 carat, there are all kinds of tricks which might put a 1.00 carat stone significantly outside that range.

Exhibit A: 1.01 Carat @ 5.50mm...The size of a well-cut 0.60 Carat stone.
Light loss and dead zones reduce the performance, even beyond the limited spread: GIA "Poor" - AGS 10 in Performance.



Exhibit B: 1.00 Carat @ 6.83mm... The size of a well-cut 1.15 Carat stone.
Obstruction throughout all areas kills light performance: GIA "Good" - AGS 10 in Performance.



Consumers are better-protected against such extremes since 2006, when GIA introduced a cut grade which prevents this in EX and VG to a certain degree. But it remains something to consider: Depending on spread, critical angles and precision of cutting not all "1 carat" diamonds present as the same size.

 

[NWD]

Mr Pollard, regarding the price jumps then, do you think that the carat weight categories exist as they do due to something other than market indicators based on the 500,000 daily data points? What might that other something or somethings be?

Thank you for the additional insight.

 

[Karl_K]

great discussion. are there anymore jargons that people in the trade use to describe higher carat weight stones?

say for example, heavy carat refers to a stone with approximately 1.02 up to around 1.14.

what about those in 2 carat, 3 carat sizes?

do they use similar nomenclature?

like heavy 2 carat for 2.02 - 2.14?

light full heavy can be used for any of the magic numbers but I have not heard them used with larger diamonds but that could just be the local market which is not heavy with larger diamonds than 1ct.
But that brings up a trivia question.

Here is a trivia question:
How heavy is a 5 grainer diamond?
How about a 50 pointer?

 

[denverappraiser]

There’s another dynamic that has happened as well. Mass market jewelers in the US have long marketed things as ‘approximately ¾ carat’ and the like. This is legalese to accommodate the fact that if you make 1000 superficially identical rings, there will actually be differences if you really look at the details. That's fair and reasonable. It’s a matter of negotiation what is a reasonable margin and exactly what standards for ‘approximately’ are acceptable. This is why the threshold appeared at 0.70 rather than, say, 0.72 or 0.75. ‘Approximately 3/4 cts’ does not mean the same thing as ‘at least 0.75cts’ but consumers tend to see them as the same.

 

[bunnycat]

For anyone who's interested, hubby and I worked up a pdf of two sets of data. The first set of calculations shows you the percentage increase in area (perceived visual increase) as you increase a stone size from it's original size. I hope these aren't too huge and are readable.

These are cool charts. The percentages are interesting in terms of diamond cutting strategies and weight loss/yield, which is relevant to any discussion of why "magic weights" exist as-they-do.

This is probably as good a time as any to caution people not to strictly correlate SIZE (mm diameter) to CT WEIGHT. For example: While Bastetcat's charts indicate that 6.4-6.5mm correlate to 1.00 carat, there are all kinds of tricks which might put a 1.00 carat stone significantly outside that range.

Exhibit A: 1.01 Carat @ 5.50mm...The size of a well-cut 0.60 Carat stone.
Light loss and dead zones reduce the performance, even beyond the limited spread: GIA "Poor" - AGS 10 in Performance.



Exhibit B: 1.00 Carat @ 6.83mm... The size of a well-cut 1.15 Carat stone.
Obstruction throughout all areas kills light performance: GIA "Good" - AGS 10 in Performance.




Consumers are better-protected against such extremes since 2006, when GIA introduced a cut grade which prevents this in EX and VG to a certain degree. But it remains something to consider: Depending on spread, critical angles and precision of cutting not all "1 carat" diamonds present as the same size.

Yes- thank you for pointing that out! The main specs I had in mind when we figured this up were stone measurements that one would tend to see in EX or Ideal cut stones, since that's all I look at, but it's definitely something that should be pointed out.

I think I tried to infer it by putting carat weights next to some of the important measurements, but I think I need to update it.

 

[NWD]

If that is true, denverappraiser, then it seems like there should not be price points at ANY, for lack of a better term, "primary" carat weights, they should all start at some amount lighter than the "primary" weights. But there are price points at .5, 1, 1.5. Is there something unique about the .75 carat weight? Thanks for your insight.

 

[John P]

Yes- thank you for pointing that out! The main specs I had in mind when we figured this up were stone measurements that one would tend to see in EX or Ideal cut stones, since that's all I look at, but it's definitely something that should be pointed out. I think I tried to infer it by putting carat weights next to some of the important measurements, but I think I need to update it.

My pleasure. The weight/percentage breaks are cool, especially for those involved in planning & yield.

Associating weight with spread is commonplace, even among jewelers: I'm doing a ton of re-cuts right now and trade-members often email me with things like "I have a 1.10 carat G SI1 I want to improve. You can save a nice 1 carat G SI1 out of that can't you?"

What I think: "Who says G? Who says SI1? What diameters? What mm heights? Is there girdle wave? Is there a culet? Are there naturals? Is there strain? What are the inclusions?"

What I say: "What's your phone number?"

 

[John P]

Here is a trivia question:
How heavy is a 5 grainer diamond?
How about a 50 pointer?

I like it when Karl plays games. Here are two more:

What's minus-11?
What's 8/8?

No trade allowed to answer, Karl?