Why are diamonds so expensive? Most people assume it’s because they’re rare, and that’s only a small part of the answer. Are diamonds expensive because of what they are, or because of how they’re sold? Mostly the second. Below you’ll see what actually sets the price, stage by stage. Every figure comes with its source, so you can check it yourself.
Quick answer
Diamonds are expensive because of four forces, not rarity
Why are diamonds worth so much if they’re not rare? Four forces set the price: De Beers’ control of rough supply for most of the 20th century, demand built by advertising, the real cost of cutting, which removes about half the stone’s weight, and retail markup. Rarity matters mainly for large, top-grade stones, and resale shows how much is lost.
Quote feels high? I review stones, certificates or quotes from any seller on a video call. I don’t sell you anything on this call.
Are diamonds actually rare?
Not in the way the price suggests. Gem-quality diamonds are common next to truly rare gems, and output has grown enormously. GIA puts rough production at well under a million carats a year in the 1870s and over 100 million carats a year in the 1990s.
In between, GIA counts about three million carats a year by the 1920s and close to 50 million fifty years later. The world mined about 98.8 million carats of rough in 2025, worth about US$9.2 billion, the Kimberley Process statistics show. Canada mined about 14.1 million carats of that, worth about US$893 million, which put it fourth in the world by volume and value in 2025.
Other gems really are scarce, and the International Gem Society lists alexandrite among ten gemstones rarer than diamond. Not every carat reaches a ring, either. Mined diamonds are sorted into gem-quality and industrial grades. Where does real rarity sit? In one corner. GIA says large diamonds are more rare than small ones, so a larger stone doesn’t just cost more. It costs more per carat.
Who controls diamond prices?
For most of the 20th century, De Beers controlled the large majority of the world’s rough diamond supply, and it paid for the advertising that made a diamond feel like a must-have. Today it’s one big producer among several. Its grip on supply is much weaker now, but the buying habits its advertising built haven’t gone.
How did De Beers control supply?
Cecil Rhodes established De Beers Consolidated Mines in 1888, and by 1900 it controlled an estimated 90% of the world’s rough production, GIA says. De Beers bought and stockpiled diamonds, other producers’ output included, to limit supply. And when a producer wouldn’t sell through it? De Beers released similar stones below the going price to undercut them, as a 1998 London Business School case study describes. The same study estimated that 65 to 75% of the world’s diamonds still went through De Beers’ selling arm in 1998.
A smaller version still runs today. As of September 2026, De Beers sells about 90% of its rough by value to approved buyers called Sightholders, at sales events called Sights held 10 times a year. That’s from De Beers Group itself.
How did "A Diamond Is Forever" create demand?
De Beers had worked with the advertising agency N. W. Ayer & Son since the late 1930s, MEL Magazine reports. In 1947 copywriter Frances Gerety wrote “A Diamond Is Forever” for the agency, as Sotheby’s recounts. Advertising Age later named it the slogan of the 20th century.
The line tied a stone to permanence, and the campaign helped make the diamond solitaire the expected engagement ring (there’s a separate post on how the diamond engagement ring became the standard). Why does that matter for price? Demand that advertising created is demand you still pay for at the counter.
Does De Beers still control diamond prices?
No, not the way it did. Australia’s Argyle mine broke away from the De Beers selling channel in 1996, the same case study notes, and GIA dates important new deposits in northern Canada to 2000.
In July 2004 De Beers pleaded guilty in the US to conspiring to fix industrial diamond prices, and it paid a US$10 million criminal fine, the US Department of Justice says. Then, in January 2008, the Mail & Guardian reported that De Beers was to pay a US$295 million class-action settlement over price-fixing claims, without acknowledging wrongdoing.
De Beers recovered 21.7 million carats in 2025, says De Beers Group’s Q4 2025 production report, while the world mined about 98.8 million. Yet the buying habits it built are still around. Think engagement ring norms and the two months’ salary idea.
Where does the money go between the mine and the ring?
A diamond passes through mining, sorting, rough sales, cutting and polishing, grading, wholesale and retail before it’s set in a ring, and each step adds cost. Cutting alone removes about half the stone’s weight. US Patent 7,225,149 puts the usual rough yield at about 50%, so a polished stone carries the cost of the rough that was cut away.
Revenue at each stage from mine to store, 2012 (Bain & Company, Global Diamond Report 2013)
| Stage | Revenue (US$ billions, 2012) |
|---|---|
| Rough diamond production (mining) | 14.8 |
| Diamonds manufactured into jewellery | 47.2 |
| Jewellery sold at retail | 72.1 |
Value nearly quintuples from mine to store.
So why are diamond rings so expensive? Most of the value gets added after the stone leaves the mine. The International Gem Society says diamonds used to pass through as many as eight intermediaries between mine and retail, each taking a cut. Cutters trade shape against weight, too, since a stone just over a milestone weight sells for more per carat. Then grading adds a lab fee on top.
Does the Kimberley Process affect the price?
No. The Kimberley Process runs a certification scheme for rough diamonds, designed to keep conflict diamonds out of the legitimate trade, and the scheme came into force in 2003, according to the Kimberley Process. It doesn’t set or guarantee a price. So a Kimberley Process certificate won’t tell you whether a quote is fair.
How much markup do diamond retailers add?
Markup is the gap between what the seller paid for a diamond and what you pay. It pays for the seller’s running costs as well as profit, so it varies by seller. The trade quotes diamonds against the Rapaport list, which is a list of asking prices, not the prices stones actually sell for.
Gross margin is profit as a share of the price, while markup is profit as a share of cost. Take a stone bought for 100 and sold for 200. That’s a 50% gross margin and a 100% markup. “Keystone” pricing, which Shopify defines as double the wholesale cost, is a 100% markup.
Signet Jewelers reported sales of US$6.81 billion and gross margin of US$2.69 billion for fiscal 2026 (year to 31 January 2026). That’s about 40% of sales, or about a 65% markup on its cost of sales, company-wide across all products, not diamonds alone.
The Rapaport Price List, published since 1978, gives benchmark asking prices for polished diamonds. It’s updated weekly and sold to subscribers. It won’t tell you what any store paid.
What do diamonds actually resell for?
When diamonds are resold, they often go for less than half of their original retail price, CNBC reported in September 2026, citing several jewellers’ websites. The markup you paid doesn’t come back, and the buyer needs their own margin to resell the stone.
Selling is slow, too. The same CNBC report says the diamond market struggles with liquidity, and a stone can sit on the secondary market for more than a year, citing a February 2026 report from the gemstone marketplace CaratX. This page doesn’t give investment advice. It explains why the resale number is lower.
Why is an appraisal higher than a resale offer?
An insurance appraisal states what it would cost to replace your piece at a jewellery store that sells that kind of item, which Jewelers of America calls retail replacement. A resale offer is what a buyer will pay you today. One prices a new purchase at retail, markup included. The other prices a used stone for a buyer who still needs a margin. Of course there’s a gap.
Are diamond prices going up or down?
They’ve been going down. Natural diamond prices have fallen from their 2022 peak, Tenoris shop data shows, and lab-grown diamonds, which are real diamonds, fell much faster and took a large share of sales. The shop prices below are US data.
In US shops, the average 1-carat natural diamond fell from US$6,819 in May 2022 to US$4,997 in December 2024, about 26%, according to Tenoris data reported by The Guardian. The equivalent lab-grown diamond dropped harder: US$3,410 in January 2020, US$892 in December 2024, about 74% lower. McKinsey & Company found lab-grown diamonds sold at a 20% discount to natural in 2018 and at about an 80% discount by late 2024, reaching about 25% of diamond sales by value in 2024.
Are they real diamonds? Yes. In July 2018 the US Federal Trade Commission revised its Jewelry Guides and removed the word “natural” from its definition of a diamond. Under the Guides, a lab-grown stone must still be clearly described as laboratory-grown, laboratory-created or similar. There’s more on whether lab-grown diamonds are real diamonds and on lab-grown vs natural diamond prices.
Are diamonds overpriced, or a scam?
No, diamonds aren’t a scam. The stone is real and durable. The US Jewelry Guides give its hardness as 10, and GIA notes you can only scratch a diamond with another diamond. But a large part of the price reflects managed supply, advertising and markup, not the material. That’s why resale offers come in so low.
My own view? I’d buy a diamond to wear it, not to sell it. Wear it for decades and the resale gap won’t matter much. What matters is paying a fair price for the grades you’re getting.
How can you tell if a diamond price is fair?
Compare the stone by its grading report, not the seller’s story, and check it against stones with the same grades from other kinds of sellers. These five checks work on any quote.
- Ask for the grading report number and look it up on the lab’s own website. For a GIA report, that’s GIA Report Check.
- Compare stones with the same grades in the 4Cs, the grading language GIA created, across more than one kind of seller.
- Expect prices to jump at milestone weights. For a 1 carat diamond ring, a stone just over 1 carat costs more per carat.
- “X% below Rapaport” is a discount off an asking-price list. It isn’t proof of a bargain.
- Price the lab-grown equivalent before you decide, and compare lab-grown engagement rings with the same grades.
Once you’ve settled on grades and budget, the next step is a ring that’s built around them.
Start with a free design consultation by video call. Tell me about your style, lifestyle and budget, and the ring is planned around the grades you’ve chosen.
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More questions about diamond prices
Why do bigger diamonds cost so much more per carat?
Large diamonds are rarer than small ones, so a bigger stone costs more per carat, not just more overall. Per-carat prices also step up at milestone weights such as 1 carat, because buyers want stones just over the line. Even a fraction of a carat can change the cost, according to GIA.
Why did De Beers stop selling Lightbox lab-grown diamonds?
De Beers launched Lightbox in 2018, pricing lab-grown stones from US$200 for a quarter carat to US$800 for one carat. On 8 May 2025 it announced it would close Lightbox, saying lab-grown prices had fallen 90% at wholesale since launch, according to De Beers Group.
Does a grading report add much to a diamond's price?
Not much, next to markup. GIA’s fee depends on the stone’s weight and the type of report. Its fee schedule, effective 1 July 2026, lists US$119 for a Diamond Grading Report on a natural diamond of 1.00 to 1.19 carats.
Is the two-month salary rule real?
It’s real advertising, not old tradition. De Beers ads pushed the two months’ salary idea in the 1980s, according to MEL Magazine, and one ad asked, “How else could two months’ salary last forever?” as an NPR transcript records.
