consumer guidance. we do not sell jewelry.

Negotiating a diamond purchase

What does a new car, expensive jewelry, and a home have in common? Their respective transactions all involve a large sum of money... and in any such transaction, it is worth the seller's time to try to "tailor" each deal to maximize the amount of revenue that can be extracted out of every individual buyer. Economists call this "price discrimination" and it simply means that you will pay more if the salesperson detects:

  • strong emotional affinity for the product (e.g. you're in love with a particular ring)
  • desperation (e.g. you're planning to propose tomorrow but still don't have the ring)
  • price insensitivity (e.g. you're rich),
  • lack of education on the purchase at hand.

This primer breaks the negotiation process into three steps: Preparation, Setting Limits, and Closing the Deal. As we describe each step more fully, we will make references to relevant pages on Diamond Review.

As you read this primer, keep in mind that you should not approach a jeweler like you might approach your "stereotypical used-car salesman." Most jewelers depend on word-of-mouth advertising and repeat business to build their clientele, and will therefore treat you fairly. That being said, there are always a few bad apples in any industry. Since you are preparing to part with an attractive sum of cash in exchange for jewelry -- something which you may know very little about -- do your homework and be smart with your purchase.

Step 1: Prepare

Economists usually refer to the problem of "asymmetric information advantage" during a transaction. In everyday terms: The party with the most knowledge has the advantage. Even if you consider yourself highly intelligent or particularly charismatic, you haven't got a prayer if you can't talk semi-intelligently about diamonds.

The next thought that pops into your head should be, "how can I possibly gain advantage over a jeweler with professional certifications, education, and 25 years of experience?" You can't, of course. However, that same thought should compel you to level the playing field as much as reasonably possible. Here are a few good steps:

  1. Start out by reading Diamonds 101 as a way to get gain a layman's education on diamond quality.
  2. Check out a diamond price database such as Diamond Review's Diamond Finder. A resource that some consumers sometimes are able to access is the Rapaport Diamond Report, which contains a price list that dealers use amongst each other. If you end up using Rapaport, be aware that the actual transaction prices vary widely from those published on the "Rap."
  3. If any of your friends has recently gotten engaged -- ask for advice!

It is during the preparation process that you should start to figure out what type of diamond you want (how large? how shiny? which shape?), what type of setting you'd like (solitaire? platinum ring?), and how much you feel comfortable spending.

Step 2: Set Limits

Picture this scenario: It's an otherwise normal Saturday, and you're casually strolling down the mall, hand-in-hand with your sweetheart. The glitter of a shiny diamond leaping out of a felt-lined, brightly lit display case lures your attention, and you casually check it out. An hour later, you've been set back $10,000 in 240 "easy" payments for the next 20 years. You look at the ring on her hand. It's a nice ring, but it's not quite what you wanted. She appears happy, but you know her tastes well. This ring looks kinda funny on her hand -- perhaps a little too square, or the diamond might be too large. Then you think about the night job you'll have to take on. 239 "easy" payments to go!

Welcome to the world of impulse buying. At one point or another, we've all succumbed to it -- the chocolate bar at the supermarket checkout, or the useless trinket at the mall. As the stakes go up, as they will when you're in the market for an engagement ring, it becomes more important be disciplined in your decision-making.

1. Decide on your Limits

The most obvious limit you should set is in terms of how much you'd like to spend. First, take a hard look at your financial situation, and assess how you much you can truly afford to spend; second, how much do you feel comfortable spending? You must find a balance between the fact that a diamond ring is a luxury, and the fact that the ring will symbolize your mutual lifetime commitment. It is important to make this decision by yourself or optionally with your partner or family, but away from external influences like a jewelry salesperson.

Your next set of limits should involve the ring itself. What is the minimum acceptable carat weight? Clarity? Color? Cut? Many people find that a color rating above "I" and a clarity rating above "SI2" are quite acceptable, but make those decisions for yourself after educating yourself on the differences. Be sure to think about the setting as well when you set your limits.

2. Stick to your Limits

This is a lot harder than it sounds. For some people, a diamond engagement ring is the most beautiful possession they will ever own.

"Sticking to your limits" works both ways. Don't buy a ring you can't afford; likewise, don't buy a ring you don't totally love. Remember, your diamond engagement ring is a symbol of a very important time of your life, so don't buy a ring that isn't quite up to "snuff".

Of course, you must be willing to re-assess your limits if you find that you're consistently unable to obtain the ring you want at the price you want. However, if you do decide to re-assess your limits, be sure to do it away from the pressures of the salesperson. Remember, you are the customer -- you will always be welcomed back later.

Step 3: Close the deal

By the time you reach step 3, you will know about the 4 C's, you will know approximately how much it should cost, and you will have set your limits based on the type of ring you want and how much you're willing to pay for it. Buying the ring should now be as simple as buying a gallon of milk. Or is it?

First and foremost, if you haven't found a jeweler that you like, be sure to do so. Once you do, here are some of the tactics that you should watch out for when making your purchase:

The flippant seller

This is the salesperson that screams or is overly emotional/passionate, might get "upset" at you because you're asking too many questions or have decided not to buy a particular diamond, might bully some of the other employees in the store, etc. Our best advice: Try to deal with someone else in the store -- come back when the flippant seller is not at work. Or, go to another store. To put it bluntly, life's too short to deal with idiots!

The "today only" special

Don't fall for any attempts to introduce artificial time pressures into your natural buying process. More often than not, the "today only" special will also be available tomorrow -- and the next day, and the day after that.

Good cop, bad cop

This is an extremely effective technique used by negotiators across all industries. It involves two salespeople working as a team. First is the "bad cop," which will deliberately insult you and act overly aggressive toward you. Then, along comes the "good cop", which tries to befriend you by pretending to act on your behalf and "defending" you from the "bad cop." As the negotiation progresses, you become more likely to accept the "good cop's" advice, eventually caving in on the sale. The key to breaking this tactic is to be just as harsh with the good cop as the bad cop.

"I have to talk to my manager"

The person you are negotiating with does not have the authority to close the deal. This technique is similar to the "good cop, bad cop" technique, except the bad cop cannot be seen (and in some cases, might not even exist!). The best way to deal with this tactic is to insist on dealing only with someone who does have the authority to close the sale, and to walk away if this condition is not met.

Persuading you through your partner

Bring your partner for browsing purposes. Once you know what you want, come into the store solo (unless the two of you work particularly well together as a team when dealing with business situations). Some salespeople will make every attempt to upsell you by having your partner try on progressively more expensive rings, and commenting on just how delightful it looks. With your beautiful bride-to-be gazing at you with puppy-dog eyes as you ponder whether to go past your limits, you will undoubtedly cave.

The extras

When discussing price, be sure you ask about all the extras, such as mounting charges, ring box, sales tax, insurance, appraisal fees, or anything else. Many jewelry stores will provide you with free cleanings or inspections. This is a great "extra" that benefits both parties -- it helps you protect your investment, and it gives them an opportunity to frequently touch bases with their customer.