The High Price of Diamonds: What Makes Them So Expensive?

For millennia, people have been enthralled with diamond—that shining, indestructible stone. On engagement rings, necklaces, and crowns, they reflect love, commitment, and grace. Although they are attractive, others question their worth given their great price. Why is this exorbitant price? Is it phoney, attractive, or rare? Geology, marketing, and other considerations help to clarify diamond price. Study of natural scarcity, quality grading, controlled supply, and human desire helps one to understand why diamonds are so precious. The question is why are diamonds so expensive? Let us explore that.

Scarcity Myth: De Beers Legacy

The high pricing of diamonds depends on their scarcity. Though the idea that they are vanishingly rare is a fantasy, diamonds are rare minerals formed deep in the Earth under great pressure and heat. For much of the 20th century, De Beers Consolidated Mines LTD controlled the diamond supply chain. Using the Diamond Syndicate and mine acquisitions, De Beers closely controlled diamond supply. Artificial supply control—often including massive diamond storage—created the impression of extreme shortage, which drove up prices and made diamonds a sought-after commodity. Although their controlled scarcity still influences diamond pricing, new diamond producers and market factors have lessened De Beers’ supremacy in recent years. Although geologically scarce, gem-quality diamonds are highly sought after and used in commercial operations highlighting limited supplies. Diamond’s high pricing is based on this well controlled scarcity perception.

Inner Value: Quality Grading and 4Cs

Diamond quality influences price independent of apparent scarcity. Standard for diamond appraisal and value are the “4Cs”—Carat, Cut, Clarity, and Color. Higher carat weight diamonds are more costly but less common. Cut determines most importantly the diamond brilliance, fire, and scintillation. A maximally light reflecting finely cut diamond will cost extra. Clarity searches for blebs and inclusions. Fewer, less visible flaws make diamonds rarer and more valuable. The most expensive diamonds are colorless ones; yet beautiful colored diamonds like pink and blue are equally desirable. The Gemological Institute of America and other independent laboratories certify gemologists to assess these 4Cs. 

Create desire using marketing, branding, and social value

High diamond prices come from carefully managed marketing and branding campaigns that have given jewels great social and emotional relevance, not from geological scarcity or objective perfection. One such is the mid-20th century De Beers “A Diamond is Forever” promotion. Because of this clever marketing approach that linked diamonds with love, dedication, and marriage, they came to represent betrothal and everlasting loyalty. Through clever advertising, popular culture placements, and strategic collaborations, diamonds evolved as symbols of aspirations, status, and life events. Established in society, this emotional connection lets diamonds command great value. Stone buyers are making investments in a narrative of social position and lifelong love. Decades of continuous marketing and society expectations have raised the perceived value of diamonds, therefore driving their price increase significantly. The great price of diamonds is related with emotional connection and branding.