The diamond trade up has always been an issue.. Let me try to show why it's the way it is with some very simplified price examples..

Let's say a jeweler has a 20% markup on his diamonds and you buy a $3000 diamond.. Profit to the jeweler is about $495.00..

3 years later you want to upgrade your diamond.. You decide you want to buy a $5000 diamond and trade in the one you had.. Cost on the new diamond is $4175.00.. You pay $2000 plus the diamond.. Now the jeweler has in his hands $2000 and a diamond putting him $2175 in hole until he can sell the diamond you just traded in.. He doesn't even have the profit he made on the first stone you traded in because he had to give that back to you as well..

For a lot of jewelers this isn't a huge issue because they sell a lot of diamonds and know that they can turn yours quickly..

But jewelers that don't sell a lot of diamonds may only have selling it back to a wholesaler as an option.. They can expect to get about 1/3 of retail, if they are lucky, from the wholesaler.. So they get $660 from him and are still $1500 in the hole.. This is why so many of them need you to buy at least double your trade in.. It's the only way they can hope to come close to breaking even..

As for investment diamonds.. No one has pushed those, except for crooks, since the 80s.. Well, Rappaport is trying to start a diamond commodity but that is a steaming pile of an idea and I just can't see it doing anything at all except putting more money in his pocket and doing even more damage to the diamond industry.. But don't get me started, I may tell you what I really think about it

LOL thanks Steve! I figured it had to do with the fact jewelers don't really make that much back. Like I had said, the only thing that I have in my favor is my jeweler is very affordable. But now, from reading your post he isn't doing that well unless he has some more expensive diamonds he is selling. He does sell a lot of diamonds though. His store is known as Brooklyn's diamond center. He had a light yellow 3 carat pear shaped diamond in an antique setting that was selling for 17,000. I don't see it anymore so I am guessing he sold it. I asked him if people actually paid those prices he said yep, believe it or not they do. I had my eye on that ring and even the discount was 15,000. Too high for me. However, he did say he would like to put one of my loose Ashas into my own engagement ring! He said he would rather do that instead of me buying another diamond, even though he would like to make the sale. He said they are beautiful and would easily pass as real diamonds! (Dang, how honest is that???) Yes, my jeweler is totally sold o the Asha! Well, when DH lets me do it...

Thanks, Steve, for the information. Now, I guess I've just been ignorant of the diamond business, but I was under the impression that there was a huge mark-up in diamonds. Something on the order of 200-300%.
I can see why a jeweler might be leery of buying back a diamond if he/she only made a 20% profit to start with. It's a wonder any of you stay in business.

You are right gemcat! Did you also notice that if you try to upgrade a diamond at a jeweler other than the one you bought the first diamond from they aren't as quick to do the upgrade at 100% buyback (if that's what it's called). I think probably because they are leery about profit and if what you trading in is all that you say it is. I tried that and even though I have the cert and everything they were still funny about it. DH said if we should ever upgrade again it must be done by our own jeweler. He knows the diamond and plus it's 100% buyback/upgrade. More likely than not, that would hold true with any jeweler. When you upgrade it's best to do it through the jeweler you bought the first diamond from. At the very least, have a cert or something in writing like on the receipt. In my case though, the cert didn't seem to help much either. It's from EGL, and this one place didn't seem too big on that laboratory. The jeweler there said they are too lenient with their grading. I think it was because the diamond wasn't bought from him, so how can he be sure what he is getting from me is all that I say it is. Even if I had produced the appraisal, it probably still wouldn't have mattered in my case, because the appraisal was based on the cert as well as studying my diamond through a loupe.

gemcat, there haven't been 300% markups in about 10 years. The margin keeps getting thinner and thinner all the time.. There are times when we can get maybe 50% on very rare stones, but even 20% is hard to get sometimes.. I know a handful of online diamond guys that are as low as 5% just undercut everyone else..

Those would be what we call pajama retailers.. They have a website and a wholesaler.. They'll take $100 profit on a $10,000 stone because hey, it's another $100 and they didn't have to do anything but make a phone call.. It has all but destroyed the diamond business..

Now, if you go to a mall store you can see those kinds of markups, but you will also some pretty scary diamonds being sold as top shelf..

Our online store has it's highest markup at 20% down to as low at 10%.. But then you get almost "no" service with that.. You pick one and buy it.. If you come in to the store you pay a little bit more, but we go through the whole educational process and hand holding while you are there.. That costs more.. It takes time and knowledge..

As for staying in business.. They aren't.. I saw a stat on a trade forum that showed that nearly 20% of all independent jewelry stores went out of business in 2005. And the trend isn't slowing down..

Pretty soon you will only be able to look at shop at chain stores and Wal-Mart or online..

Depends on how the retailer sets their prices....Most mass B&M stores mark up 200-300% on full retail before any sale pricing, but if its a smaller store they may price a whole lot lower to compete with internet pricing, which is really low.
Even B&M stores with a mega markup never sell for the full markup, because there's always a price slash for sales...
Example, a ring is purchased for 1000...and priced for sale at 300% mark up, so $4000...but its sale time, and that ring is 50% off with an additional 20% off coupon and you can save another 20% off if you open a store credit card. Youve all seen those sales. Well, that means that ring went from selling at 4000 to 1280...only 280 bucks profit, plus take out the sales persons commision, plus the cost of having the ring reconditioned if they planned on reselling it...they may have only made 150 dollars on that entire sale.

This is what I did in the last Chinese B&M store I went to that sold diamond jewelry. I say Chinese because this only works in those stores.. LOL And keep in mind if I see something in a store, chances are it will be there for a while and if not, they'll restock it again after a while.

I go in with a budget in mind give or take a couple hundred, tell them I want to look at rings. Of course they'll ask me what my budget is, so if my budget was $1200, I'd say $1000-$2500.

This ALWAYS makes them show me the stuff around $2000+ and if it's something I saw before and liked, I'll ask them how much it is. They'll give you the price on the tag. Then I say no no, that's too expensive...so then they'll ask if you'd be interested in seeing some of the stuff they have for sale which most likely has a 50% off discount. So then I waste some more time looking at those discounted items that I clearly don't like and ask for the one I did like priced at $2000.

I say, I still like this one better, they'll give me a discount and I give them a number that's 50% lower than their tag. This almost guarantees that I get the item at $1200, which is why I never look at things priced around my budget. These retailers have huge markups but after a little negotiating I found that they have to put those numbers in or else there's no room for negotiating. Which is why I never go to chain stores...their stuff isn't pretty and their prices are outrageous and you can never say the same things in those chain stores.

the other thing to consider re diamonds is that they are really not rare....in that they are everywhere...the common, average stones...thus, not great resale. Add to that handing down to a daughter or son to have later does not always come with gratitude from the recipient. Unless the diamond is exceptional quality, resale is pretty tough to get a top dollar amount....no equity!

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It is frustrating to purchase a diamond and realize that you have paid retail for it and it does not have the value you thought it did. This is a very common mistake people make, especially when purchasing an engagement ring. We are so wrapped up in the moment we spend an astronomical price to make that individual happy only to find out later that the rings actual value monetarily is far less.
Here are some tips that will help you ensure you purchase a diamond or any jewlery that will come close to holding its value:
#1--NEVER purchase a diamond from a retail establishment...even if it is on sale.
#2--Always buy a preowned diamond and have it inspected prior to purchasing by a certified gemologist of YOUR choice...preferably in your hometown.
#3--If the ring is not a solitaire, try to buy a ring that comes close to equalling its value in gold weight. In other words...if you purchase a cocktail ring with smaller stones(.05 and .10's)...make sure the gram weight is fairly heavy so you could get the majority of its value back in gold. Of course, certain stones have a high value(diamonds,emeralds,tanzi,etc) so take into consideration stones that are .35 or higher in diamonds and 1 carat and above in the other stones.
#4--Appraisals are really worthless in my opinion. Go to 10 jewelers and you'll get ten different appraisals. It is better to look up what similiar items would be selling for on the main online auction site as it has now set the standard for smaller ring sales.
#5.TRADE and barter for items whenever possible.

I hope this gives a few tips to help you find a diamond at a good price.