Lab Diamond Pricing

The most important event in the jewelry industry in a generation is the coming of age of laboratory grown diamonds. In just the last few years the technology has evolved to the point where quantities of high quality material are flowing into the market from a proliferation of manufacturers, making lab grown diamonds ever more available and affordable. As a result there has been a huge amount of interest on the consumer level and sales of lab grown diamonds are spiking. With the surge in interest, consumers are naturally trying to get a handle on pricing and value. And the wide range of lab grown diamond prices, for what appear to be similar diamonds, is confounding to many consumers. This lab diamond pricing introduction provides helpful guidance to this choppy new marketplace.
1.56ct D VS1 Round Precision Lab Diamond
1.56ct D VS1 Round Precision Lab Diamond
It is necessary to realize what a sea change lab diamonds represent to the market, and how quickly evolving both the technology and the market are, in order to understand the pricing of this new product. It is also necessary to understand that there are two very different growth methods (HPHT and CVD) with very different production costs. Each of these growth methods has distinct quality issues that also affect market value. And lastly, the tangled jumble of producers, many of whom are new to the gem industry, makes consistent pricing almost impossible. As a consumer, figuring out the “right price” of a lab grown diamond is therefore a daunting task, especially considering that most vendors do not stock their own diamonds and instead rely on datafeeds from a variety of manufacturers. The diamonds are therefore not carefully pre-vetted and may have quality issues, including those that are not obvious from a gemological laboratory report. In this article we will identify the factors and issues you should keep in mind in order to make sense of the volatile and bewildering market for lab grown diamonds. For purposes of this article we will focus on pricing of colorless to near colorless lab grown diamonds. Fancy colored lab grown diamonds have different properties generally related to specific trace elements that are used in the creation.

Two Technologies – HPHT and CVD

First and foremost in understanding lab diamond pricing is the fact that there are two main ways that diamonds are grown in a factory, and they are very different. Synthetic diamond was first made experimentally by General Electric in the 1950s. They used a huge press to create the pressure and temperature necessary to synthesize diamond from pure carbon. This was essentially the process now known as HPHT (High Pressure High Temperature). Factories are now equipped with multiple presses that are very heavy and very expensive to build and house. Consequently the cost of producing diamonds by this method is higher than the competing CVD method. Because the entry cost for new HPHT manufacturers is extremely high, there are fewer of these factories and they tend to be run by teams with more experience in producing diamonds.
Chemical Vapor Deposition (CVD) is the method that most lab grown diamonds are produced by because the process is less costly and more flexible. As opposed to the giant presses that weigh many tons used in HPHT growth, CVD machines are small and light weight and much less expensive. They do not require extreme pressures required by HPHT allowing the machines to be equipped with a view window that makes it possible for the operator to see a problem developing and to make corrections or adjustments during the grow. HPHT diamonds are grown in a single uninterrupted process. Most of the large crystals that have been produced to date have been grown by CVD, but advancements in technology are resulting in more HPHT in larger sizes starting to enter the market.

Lab Diamond Quality Issues

Striation and Transparency

Diamonds grown by either method can be of very fine quality, but each method has its own vulnerabilities and distinct quality issues. As mentioned, CVD diamonds can be adjusted in progress. While this results in fewer failures, the start and stop nature of this process can result in anomalies in the carbon crystal lattice causing striation in the layers of carbon atoms. If there is a significant amount of striation the transparency of the material can be reduced, resulting in diamonds with a slightly hazy appearance. This can be very subtle and may not be readily apparent to the untrained eye, but diamonds with transparency deficits (this can be true in natural diamonds also) will never have optimal light performance even if they are precision cut.
HPHT diamonds are grown in one session, which may be weeks long. The environment remains constant and the diamond atoms tend to grow in a much more regular process. Starting and stopping (CVD) causes fluctuations in the growth environment, which is not an issue for HPHT. Therefore, HPHT diamonds tend not to have striation issues and are more reliable in terms of having full transparency. Transparency is unfortunately not a characteristic directly reported on gemological reports.

Blue Nuance

Boron is used in the HPHT process and the concentration of this trace element is critical. Boron is what causes the color in natural fancy blue diamonds which are exceedingly rare. If too much boron is present in the production of colorless HPHT diamonds, the resulting material will have a very light blue hue, referred to commonly as “blue nuance”. This can be present even in diamonds graded in the colorless range. It is a very subtle effect, and arguably makes for an especially attractive diamond, however because it looks a bit “unnatural” it is considered a negative property for a lab grown diamond. Prices of diamonds with blue nuance may therefore be discounted by manufacturers, and this property generally does not appear on a laboratory report. (IGI reports may contain the comment “faint blue”, an indication of blue nuance that is unrelated to fluorescence)

Color Tinge in Lab Diamonds

The vast majority of lab grown diamonds are Type IIa, which means they have negligible amounts of nitrogen which is the trace element that is present in the vast majority of natural diamonds giving them varying degrees of yellow or brown body color. But besides blue nuance, lab grown diamonds can have other color tinges that detract from their appearance and effect their pricing. A gray tinge is common due to graphitic inclusions or defects in the carbon lattice. CVD diamonds are commonly subjected to treatment to improve color issues that may have developed during the growth process. This treatment is not always successful and may introduce other issues.

As Grown Lab Diamonds

There is a sentiment in the market that favors lab diamonds that are grown in high quality without the need for secondary treatments. These diamonds tend to fetch higher prices than those that have been treated. Gemological reports will generally indicate whether a diamond is “As Grown” or if has had (or possibly has had) secondary treatment.

The Lab Diamond Producer Landscape

The proliferation of manufacturers that have jumped on the lab diamond bandwagon is one reason for widely varying prices. Particularly in the CVD realm because of the relatively low entry cost, many companies have sprung up to take advantage of this new surge in interest among consumers. Because some of these producers do not have long history and experience growing gem diamonds, and because many have different business models and goals, the variances in quality and pricing are considerable. As prices have steadily dropped due to technology improvements and increasing supply, business is becoming very challenging for some manufacturers leading to price cutting, especially for those diamonds that may have quality issues.

Lab Grown Diamond Merchants

As a consumer you have a wide variety of choices in terms of the retailer you trade with, and choosing your diamond vendor should be a top priority. As we have seen lab diamond pricing is highly variable and prices do not always equate to quality and value. Selecting a vendor with extensive expertise in diamonds and a proven reputation for customer care should be goal number one.
Most online companies offer large selections, but most listings may be simply vendor inventory that they do not have possession of and therefore have not physically evaluated. As has been noted in the discussion about transparency, blue nuance, color tinge, and cut quality, there are many important factors that are not necessarily reflected on a laboratory report and require a trained eye to detect. This is where dealing with a trusted and knowledgeable merchant can make a huge difference in the value you receive from your purchase.
Some merchants carry carefully vetted in-house brands that are guaranteed available with a full compliment of evaluations. Shopping these diamonds is your best bet for getting the best, knowing exactly what you are getting, and being sure that the diamond is actually available after you have spent your valuable time deciding on it.

Large Sizes – Larger Pricing Variations

Lab diamond sizes , especially 4 carat and larger, are much more variable in price than more mainstream sizes such as 1-2 carats. This is primarily a factor of growth method. Larger high quality material has only recently become widely available, with CVD leading the way. HPHT is catching up rapidly and as we have seen is a more expensive process, thereby creating large deltas between prices of large CVD vs HPHT lab grown diamonds.
4.04ct G VS1 Round Precision Lab Diamond
4.04ct G VS1 Round Precision Lab Diamond

Fancy Shape Lab Pricing

One of the benefits for consumers in the availability and affordability of lab grown diamonds is the opportunity to purchase multiple diamonds in different shapes. Cut quality is one of the factors complicating pricing of lab diamonds. While round diamonds have better known cut quality parameters, fancy shapes are more complex in terms of how proportions and cut precision combine to determine light performance.

Cut Quality in Lab Diamonds

Lab grown diamonds have essentially the same chemical, physical, and optical properties as natural diamonds. Therefore, they have the potential to be just as fiery and brilliant as the finest natural diamonds. But like natural diamonds the facet design, proportions, and precision of the facet alignment in 3D space must all be top notch in order for the diamond to have optimized light performance and beauty. Dealing with a merchant who is known for diamonds of elite cut craftsmanship and light performance, such as super ideal cut diamonds, is the best way to ensure your diamond is optimized for optics and beauty.

Lab Diamond Pricing vs Natural

In the early going manufacturers were positioning lab grown diamonds on similar footing with natural diamonds in terms of the 4Cs, and even pricing them according to the Rappaport list which has been the industry guide for pricing natural diamonds for decades. But because lab diamonds are a created product driven by technology, with none of the inherent supply-limiting rarity factors of natural diamonds, that structure soon became absurd. With manufactures offering 97% - 99% back of list it soon became obvious to everyone that lab diamond pricing was not amenable to this structure; the products were completely different from a supply/demand perspective. In natural diamonds small differences in color and clarity can have major impacts on pricing. Lab grown diamond quality is coming under ever-greater control due to technology advances, and today virtually all of the material reaching the market is in the upper reaches of the color and clarity scale. There is little difference in lab grown pricing between a D VVS1 and an F VVS2, and most shoppers are setting their sites on G VS1 and better, because there is no need to compromise on these quality aspects. There is plenty of top material to choose from and it is so affordable that there is little economic incentive to go lower.

The Future of Lab Diamond Pricing

It’s very hard to predict the ultimate evolution of the lab diamond market. It very much appears that prices are dropping as manufacturing costs become lowered by technology advances. Are we nearing a bottom in terms of the base cost to produce gem diamonds? Probably not. Is it possible that this market fully bifurcates between HPHT and CVD because of the significant differential costs between the two? Or that CVD improves to the point that HPHT gets completely priced out of the market? Is it possible that CVD production becomes so easy and inexpensive that retail jewelers will be growing diamonds to order in their shops just like they do wax growing and casting? It will be very interesting to watch this all unfold.

Conclusion

There are a variety of factors that contribute to wide pricing differentials between lab diamonds of similar size and grade. One major factor is growth method as HPHT is a more expensive process. There are also a number of quality/value factors that do not show on a laboratory report making it hard for shoppers to know they are truly comparing apples to apples. Moreover, it is a new and rapidly evolving market that is still trying to find equilibrium. The low entry cost of CVD technology has created a producer landscape that includes many manufacturers with limited experience and has led to a supply side with a significant amount of second grade material, leading to deep discounting.
The differences in lab diamond vs natural diamond pricing is considerable and likely to become even greater as technology advances are made in the growing sector. In the larger sizes this gap will almost certainly shrink over time whereas in more mainstream sizes they are finding equilibrium more quickly.
There are many factors that contribute to cost and valuation differences in lab diamond pricing, but it is difficult to calculate how much each affects price. The best advice for shoppers in this market is to choose your vendor wisely. Select a jeweler with extensive experience in evaluating diamonds and with a great reputation for customer care.

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