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The illusion of economy

15 january 2018

When it comes to synthetic diamonds, the first thing that the man in the street hears is the assertion that "they are real, but much cheaper." The question what in this case is to be considered "real" is rather ambiguous and rather lies in the field of personal preferences. However, the arising material benefit can be assessed in terms of absolutely real amounts on one’s bank account. The more so, because the price remains the major factor when people come to a decision to make a purchase, as shown by the survey conducted by Stax Inc., a global strategy consultancy among 40,000+ respondents. And if the older generation is still confidently making their choice in favor of natural diamonds, the millenniums are not so unequivocal. The idea of ecological and moral purity of the product (no child labor or ruined nature or blood money) in addition to the "tasty" price has found a considerable response. Indeed, isn’t it really nice to make a contribution to the salvation of the world, and even save at the same time?

However, it is unlikely that at least one single manufacturer of lab-grown diamonds will want to tell the buyer about how many small (and not so) nuances are hidden behind such an attractive advertising policy and what the real and not imaginary difference in the cost of jewelry graced with natural and synthetic diamonds is.

During 2017, the claimed price advantage of synthetics ranged from 20 to 30% depending on the edition, social network and degree of aggressiveness of the marketing policy pursued by a manufacturer. It should be said that over the past two or three years these declarations have turned to be noticeably modest – before that the unquestionable savings were said to reach about 40-50% of. And now there are voices saying that the price advantage of synthetics has not been realized so far.

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In the meantime, this real price advantage simply cannot come into being from nowhere - except from the sheer desire to get one’s piece of cake by all means. Despite the fact that laboratory cultivation does not require to develop diamond deposits, build factories, reclaim land, employ thousands of workers and fulfill dozens of social obligations, the cost of producing synthetic diamonds was only $ 24 less per carat in 2016, according to Morgan Stanley. The reader will immediately have a question (believe us, we also had it): How come that synthetic stones are cheaper? The answer is they can be cheaper in no way. And it is not necessarily that a lab-grown diamond will help you to save any money at all! It may well be that it will be even more expensive.

About a year ago, we conducted a survey of retail prices for jewelry with synthetic and natural diamonds, which showed that the choice in favor of the first does not provide a guaranteed price advantage. But maybe we just chose the wrong time? Let's try to compare prices in one of the hottest pre-holiday periods – on the eve of Christmas and New Year. The more so, as the year of 2017 in the United States turned out to be the most favorable pre-New Year period in terms of sales in the last six years.

To begin with, let's take the most economically modest audience – the buyers who cannot afford to pay several thousand dollars for a ring and opt for a small stone due to their low incomes. Let us compare the prices for a classic solitaire ring made of 750 white gold and graced with a round 0.3 carat diamond of H color and two different clarity grades - VS1 and SI1.

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An interesting selection, don’t you think?

Three. Percent. This is the average difference for SI1 clarity rings. Somehow too poor for "substantial savings"! Moreover, the buyer of a 0.3 carat ring has every chance to overpay for the "eco-friendly" gift $170 to $430 - that is, in an unsuccessful scenario, almost 1.5 times. And we are considering a person with limited financial resources, for whom such a trick has no other name but swindle. Not to mention the fact that the most budgetary ring in our selection from Brilliance with a natural VS1 diamond is cheaper than its synthetic analogue by 30 bucks.

However, buying a ring (especially for engagement) is a serious matter. Let's look at the rings bearing stones of the same characteristics, but larger - 0.5 and 1.0 carat.

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The difference in the average price is more noticeable, but it is still not 20% and far less than 30%. And in general, there is no way to talk about indisputable benefits of lab-made stones – we can only talk about being cautious when choosing a retailer. Having a budget of two or three or four thousand dollars, you can pick up a jewelry piece either with a natural or synthetic stone of absolutely identical characteristics. The difference will be only in the elusive elements of their setting design and in the amount of money pocketed by the retailer and manufacturer.

Unfortunately, it is unlikely that any of the jewelry consumers will conduct a large-scale market research before buying. Therefore, it is always possible to find a comparison option not in favor of natural stones and present it at face value, as for example is done by the author of this article.

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But this is what we found for the same diamond characteristics:

Example #1:

As for natural stones, the price is close to that of other retailers. But we had to update the price for synthetics, because $ 3,880 and $ 4,690 appear to be slightly different numbers.

Brilliance mined diamond: $ 6,540

Brilliant Earth lab-created diamond: 4,690

Apparently, the author spent much time choosing an option with a maximum price difference, because, for example, the same Brilliance has a 1.13-carat stone, which costs 5,103, while Brilliant Earth has a lab-created stone of the same carat weight, color and clarity at 5,280.

Example #2:

Brilliance natural diamond: 3,063

Blue Nile natural diamond: 3,820

Not surprisingly, Blue Nile did not get into this comparison, unlike the first example! Synthetics on its background looks far from being so advantageous. The natural stone from Brilliance is even cheaper - the diamond itself, without the surcharge for the jewelry piece design and the appetite of the final seller.

Example #3:

Brilliance: 14,138. The difference is already more significant, but still barely reaches 20%. Not to mention that for comparison purposes the author for some reason (and this reason looks indeed strange, don’t you find?) chose a stone, which is more expensive by $ 2,000.

At this point we thought that maybe the size exceeding one carat is exactly that coveted area where the difference between synthetic and genuine diamonds becomes significant? And we decided to continue the comparison for large stones – it should be said that this is a rather nontrivial task, because the choice of lab-made diamonds is turning more modest the bigger they grow.

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And again, it did not work! The "huge", as the manufacturers assure us, advantage is noticeable only in one case - a diamond of 3.07 carats. Let's open the secret – it is just the only size in the range of three carats, where we could find three artificial stones for comparison. The choice of natural stones was much broader, and we could easily find a 3.02 ct diamond at Blue Nile sold for $ 32,000 or a 3.04 ct diamond of I color at James Allen for $ 22,000 and a 3 ct diamond at Kill Brilliance for $ 3,000. And several dozens of excellent natural options within a 12-15% price difference.

By the way, lab-grown diamonds from Miadonna, which is an ardent proponent of caring for African children, are in fact even more expensive than natural stones. Maybe this is the real reason behind the company’s aggressive marketing? Perhaps, if the manufacturer of artificial stones will start investing in the social sphere of African countries not only on the pages of social networks (as it is done by diamond mining companies), there will be no trace left of the proclaimed financial advantages?

In the meantime, we would like to recall that the average price of an engagement ring in the US is about $ 5,600. At least, this is the opinion of analysts from the Gunderson jewelry company, and we have no reason not to believe them. As we have seen above, this is the price approximately of a one-carat diamond - that is, for an average consumer all the assurances of economic attractiveness of synthetics pouring from the pages of social networks and news publications, are no more than another round of market competition, in which the reader will be given various metrics, reports and statistics turned at the right angle. The reader will be shown beautiful pictures of happily smiling couples or subtly offered to extend the honeymoon period using the money saved on buying rings. But no advertiser will advise the buyer to choose jewelry retailers more carefully and spend a little more time comparing prices - and getting the same savings in addition to a natural diamond.

Olga Tretyakova, Rough&Polished