Sapphire Pricing: Main Factors that Determine Sapphire Value

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When it comes to pricing gemstones, particularly those which are of the non-carbon variety (i.e. anything other than diamonds) there is quite a bit of confusion we need to get through. For starters, given that sapphires unlike diamonds don’t have the benefit of certified quality criteria, the tendency in the industry has been to apply the same principles that are used to measuring the quality of diamonds to that of sapphires. Notable here is the application of the 4Cs of diamonds, which are used to measure diamond quality, to the study of sapphire value. A practice that naturally has comes to affect how sapphires as gemstones are priced. Further compounding the matter is the seemingly arbitrary character with which various companies choose to price their gemstones: with prices of sapphires ranging anywhere from hundreds of dollars to tens of thousands, with little explanation on the reasons for doing so. Since price is related to the quality of the final good, it is naturally the most significant indicator when it comes to affecting purchasing decisions. So we thought it was time to enlighten the reader, particularly those who are or are going into a long-awaited search for precious stones, or fine jewellery that contains them on the factors and forces which help determine the price of sapphires.

Overview of Factors that Determine Sapphire Prices

When it comes to understanding the nature of sapphire pricing it is best to start by understanding the factors that contribute to the value of sapphires: their rarity, beauty, size of the stone. The value of sapphires (i.e. the price they command) is based on the strength of these core characteristics, which in the world of a diamond involves the 4Cs of diamonds. As noted, this framework also applies in the world of sapphires, though not as uniformly. As factors such as colour and its relationship with other elements of the gemstone necessarily vary. This is an expansive subject, since the application of the gemstone quality framework involving: Carat, Cut, Colour, and Clarity differs with respect to the gemstone type, which is especially true in the context of sapphires. Added to these variables there are two other key factors, which we have structured under a new framework for measuring sapphire quality: The 6Cs. Here we will engage other, less-known, but equally significant factors that work into this equation. Factors which gem companies and jewellers rarely if ever communicate.

The Sight of Purchase

It is a common truth in the world of business, that from the standpoint of the consumer it is usually best to purchase goods closer to the country or region of its origin. Note this is not a question of what part of the world the product comes from, rather it is about reducing the proximity between where the good is sourced/manufactured and the final destination (i.e. outlet) from which you make the purchase. Since economic goods, whether natural resources or finished industrial or consumer goods are subject to changing value, depending on the product type and extent of the changes or value additions they are subjected to. However the value of the good, that is the market price it commands is also subject to change depending on the geographic distance it is purchased in relation to its sourcing or manufacturing origins.

For example, in the world of gems, it is common knowledge that people who visit a gem-rich nation like Ceylon (Sri Lanka) for example, do so with an eye on acquiring precious stones and fine jewellery at lower prices. The idea being that to purchase gems and jewels in a region that is closer to where it is originally sourced will help reduce the additional costs that it will incur, rather than when it is purchased internationally. As export duties, and other expenses that international sellers add to the final cost of the product can be avoided or minimized. So if you’re in the market for gemstones and if you’re looking for a decent bargain, and if you’re planning a holiday to a tropical destination then a journey to gem exporting nations like Thailand or Ceylon might be a good choice.

Gems vs Fine Jewellery

Buying precious sapphires, like a gemstone in general, differs depending on the final state the item is found purchased in. When it comes to precious stones: which in this context deals with sapphires stones that are either sold as cut, polished, shaped gemstones or as part of a fine jewellery item or set. So it is interesting to note that the price of the sapphire, in this instance, depends on the state that you purchase it in. With a simple sapphire alone costing a relatively lower, in relation to the price the very same sapphire will command when it is made part of a jewellery item like an engagement ring or necklaces. The reasons for this come down to the business side of things. The sale of a gemstone alone incurs a lower cost for the business. The price differentials are determined by production and maintenance costs for jewellery incur in addition to the cost that comes to the sourcing, storage, polishing and sale of gemstones alone. Businesses owners in the jewellery and gemstone business know this, for the value addition process, where a polished gemstone becomes a glowing part of a fine jewellery item involves additional stages in the production process, and each of these entails risk, cost, and additional responsibilities. Hence businesses tend to add this markup to the jewellery item containing the same gemstone.

Who you are Buying Sapphires From

We live in an interesting world. With the rise of online market places, e-commerce sites and drop shipping the chance to start your own business venture, even which involves those with relatively high risk and maintenance like jewellery and gems operations, is now possible. In this world where virtually somebody with an internet connection, relatively small investment and some connections with the industry can become jewellers, it is important to note where your sapphires and sapphire jewellery are coming from. Often in the jewellery business, particularly when it comes to the business of selling sapphires, the probability of running into such jewellers, who are basically resellers of gems that are sourced from suppliers who have access to gem merchants in gem mining nations. With value additions taking place at different locations, maybe different companies in the value chain. So when it comes to such gem sellers and jewellers the number of intermediaries that are likely to be involved in the process goes up. The higher the number of middlemen the larger the price, as each of these stakeholders stands to gain a cut of the final sales price. Thus increasing your final cost. A more solid sapphire option would be to go for jewellers who source their own gems. Jewellery companies that control access to gemstones, and are also able to manage the design, creativity and manufacture of the sapphire jewellery or polished, cut gemstone.

The Non-linear Relationships between Gemstone Size (Carat) and Price

In the world of gemstones the larger the carat the higher its price. This positive relationship between a gemstone’s carat and its price is well understood. But what is less well understood is the nature of this relationship. As the connection between carat size and price whilst true, the relationship-that is how the price of the gemstones go up-whilst upwards moving, is not a straight one. Experts will tell you that gemstone prices will rise steadily till they reach the 1.00-carat mark, which is the magical number when it comes to gemstone pricing. This means that gemstones in the “in-between” range: Gemstones that weigh anywhere from less than 1 carat: (e.g. 0.50) to the 1-carat mark will command a relatively lower price. This is why jewellers push the limits of the sapphire carat range as close to the 1-carat mark as possible, with a large pool of gemstones. This means sapphires (and other gemstones) can be found at various carat sizes, with minuscule differences (e.g. 0.90 - 0.99) commanding notable price differences.

But once the 1.00-carat mark is hit, things start to change. One needs to understand that in the world of gemstones the difference in carat or CT (carat total weight) is a key indicator of value. The 4Cs of diamonds and the 6Cs of sapphires engages the role of Carat as a key indicator in determining gemstone value and by extension its price. Since the carat needs to be balanced with other factors like clarity and cut, so maintaining a larger cut becomes a challenge, hence the higher markup in relation to the carat of the stone. In terms of the non-linear character of sapphire pricing in relation to the larger carat, when the weight of the gemstone hits and then starts to go past the 1.00-carat mark the prices will increase considerably. In fact, prices can at times or increase exponentially, depending on the increase in carat size. For example, a top 1.00-carat blue sapphire may cost $1500 dollars but a sapphire with the same characteristics at 2.00 carats will cost $ 4000 or more. Here the quality of the sapphire cut and type of jewellery type (e.g. solitaire engagement rings) will also play a key part. That is if one is opting solely for a cut, polished single gemstone.

In Conclusion

Add all of this together and it may seem the process of purchasing a quality sapphire is too complex, with so many different variables to consider. From the standpoint of the reader, that is if you are in the market for quality sapphires, it is important to gain a basic understanding of what you are looking for when it comes to the sapphire (e.g. a sole gemstone or a fine jewellery item). Further, when it comes to buying gemstones it is important to be aware of the wider process that involves the purchase of sapphires, for often it is not the gemstone alone, but the security element requiring trust, the availability of support services etc. This is especially important when it comes to the purchase of sapphire jewellery. Further when it comes to buying quality sapphires the authority of the company (site) is important. This not only applies to the presence of a wide variety of gemstones but also the knowledge of the industry that the company is able to communicate, and the strength of its supply chain. We at Brilliyond specialise in providing top quality Ceylon sapphires. As a business that operates in-house design and crafting teams, with firm control of the supply gemstones, with long term relationships with merchants to back it up, and an established presence in the Australian market, with over a decade of experience we are a known quantity. So feel free to look around, you might be surprised.