How Can a 1 Carat Diamond Range From $2,000 to $20,000?

Diamond prices don't always seem to make sense at first glance. For example, you might assume that if a 0.5 carat diamond costs $2,000 that a 1 carat diamond would just be double the price, aka $4,000. But, that's not the case.

There are more factors than size that impact the price of a diamond, including rarity, cut, shape etc. That's why two similarly sized diamonds can have very different prices.

So, what exactly are some of the differences between a $2,000 and a $20,000 diamond of the same size?

Understanding the various factors that determine a diamond's price will help you figure out which diamond is right for you and how you can get the most for your budget.

Here are six different questions you will need to ask about a diamond before understanding its price:

1. What is the exact carat weight of the diamond?

Did you know that a diamond weighing 0.98 carats is a lot less expensive than one that hits the 1.0 carat benchmark...even though the visual difference between the two diamonds is almost negligible?

The reason behind the price break is old school economics. More people prefer a diamond that weighs 1.0 carats vs 0.99 carats so there is actually a lot more consumer demand for diamonds that weigh 1 carat (or slightly more) vs. diamonds weighing just a tiny bit under 1 carat. Higher demand equals higher prices for those sizes. That's why "magic sizes," which also include two carats, three carats, etc. are a big step up in price relative to slightly smaller diamonds.

If you are looking to buy a diamond on a budget and don't have your heart set on getting a 1 carat diamond, look for a diamond that is slightly less in carat size (e.g., 0.9 carats instead of 1.0). It might be a little harder to find because there aren't as many diamonds in that size range available, but you can get a great value.

2. How many flaws does the diamond have and how many can you visibly see?

When it comes to a diamond's "clarity," the less imperfections or flaws that the diamond has, the more valuable it will be.

Diamond certification labs, like the GIA, rank on a scale based on how many flaws each diamond has and the size and prevalence of those flaws. The closer to flawless the diamond is, the more rare and the more expensive it will be. Click here to understand the GIA scale for clarity.

Sometimes these flaws are visible to the naked eye, but some you can't even see unless you are looking using magnification (such as microscope or a loupe). A less expensive 1 carat diamond may have a lower clarity grade, but often the flaws aren't completely visible to the naked eye. This is a great way to save money on diamonds if you are willing to settle for a diamond with a clarity grade of SI1 or SI2.

3. Does the diamond have some yellow in it?

It may seem that all diamonds are practically the same color. But, some diamonds are actually more yellow than others. The more expensive diamonds will be closer to what is described as "colorless," while the less expensive diamonds may have some shade of yellow in it (which is not as desirable).

Sometimes depending on other factors like cut and clarity, it can be harder to see the color in a diamond. Also, certain color metal settings may accentuate the color more than others. Keep these things in mind when looking and evaluating the color of a diamond in person.

If you can believe it, even very subtle differences in color can affect the diamond's value dramatically. Color is a very important factor when understanding a diamond's price. Download this free educational guide on diamond color to learn more about how it's graded and the effect it can have on price.

4. How well does the diamond sparkle?

The way that a diamond is cut helps to determine the price of the stone. Cut is one of the most important factors in the diamond's ultimate sparkle, brightness, and beauty.

Cut refers to how the facets and angles of a diamond work together to reflect light out of the stone. A good cut will have a tremendous light return and will result in a sparkle that you can see from across the room. A poorly cut diamond, on the other hand, will appear dull and lifeless comparably.

Labs like GIA also place diamonds on a scale for their cut grade. An ideally proportioned diamond that will create an amazing sparkle will cost you much more than a poorly cut diamond that is flat. We believe a diamond should sparkle brilliantly and we don't typically recommend a poor cut stone, however a moderate cut can help bring down the price of a diamond considerably.

5. What is the shape of the diamond?

A diamond's shape can actually impact that price of a diamond. While round cut diamonds are the most popular today, they are also one of the most expensive. Round cut diamonds cost more because of higher demand and because most of the raw material is removed during the cutting process. In other words, it takes a larger rough diamond to cut a round diamond than other shapes.

Other "fancy" cut diamonds, such as princess cut, use less wasted material when they are being professionally cut so are typically less money carat for carat.

6. Is it a certified diamond?

The fact that a diamond is certified doesn't mean that its intrinsic value is any different or its price changes because of the certificate. If certifying a diamond raised its value and price, every diamond seller would only sell certified diamonds! Be aware that different testing labs have different quality standards when evaluating diamonds. So comparing diamond grades of two different labs isn't apples to apples, because their standards might be very different.

A certified diamond from an accurate, high-standard lab such as GIA or AGS will help you feel more confident about what you are actually buying. A non-certified diamond might seem to cost less but you need to be cautious that the diamond's grade might be less than stated, relative to the standards of GIA and AGS.