I would like to see specific statistics regarding retail markup of
engagement rings. I know jewelers expect enormous profits from
engagement rings, and I have heard that markups range from 50% to
400%. An acquaintance told me he bought a ring priced at $10,000 for
only $1,000. A friend whom I trust, more familiar with the industry,
speculated that a ring priced at $13,000 probably cost the store
$4,000.

I'd like to believe these stories, but I want concrete evidence. I
know there are significant markups throughout the distribution chain,
but I am interested specifically in retail markup. In other words: If
I'm negotiating with a sales associate, I want an idea as to his
bottom line. I want information specifically about brick-and-mortar
retail stores, not online merchants.

This is a follow-up to my previous question (#284322) about engagement
rings. I was very pleased with that answer, which may provide a
starting point. As with that question, I would like to see at least
two different sources, and I would be happy to find more. Please
request clarification if necessary. Thank you.

Retail jewelers mark up diamond engagement rings by 100% up to a
staggering 1000%. I've gathered some information for you; the
estimates on markups are broad and rather vague, but most of the
reliable sources I've seen indicate that 300% is not an unusual
markup. Your acquaintance who says he bought a $10,000 ring for $1,000
might be on the level. While a 1000% markup is not typical, it's not
unheard-of.

"There is nothing wrong with bargain shopping or shopping around for a
ring or a stone because the standard markup on a diamond is 300%.
Depending where you live, it could be more. That means the jeweler may
have purchased the stone for $1,000.00 but is selling the stone for
$3,000.00. It behooves to know this key information because it gives
you a little bargaining power if you decide to purchase a ring or
stone from someone other than a 'mall' jewelry store. Mall jewelry
stores are limited by corporate policy on the amount they are able to
discount their product."

Marilyn's Wedding Keepsakes: The Nuts & Bolts of Buying a Ring
http://www.marilynskeepsakes.com/wedding_planning/companion/ring_buying.html

"There is usually a very healthy markup on diamonds and jewelry
ranging from 100% to 400% over cost. There should be no reason for you
to pay the regular retail price.  Smaller, local stores usually have
lower overhead than 'mall' stores and you may be able to find a better
value and better service at the smaller local store."

Cached copy, Wedding Planning: ENGAGEMENT RINGS, WEDDING RINGS AND DIAMONDS
http://216.239.39.104/search?q=cache:UOsl66pDOhwJ:www.weddingplanning.com/tips/wedding_rings.html

"Vast difference between retail and wholesale, and not just the
markups either, but in the basic way of doing volume business, with a
great repeat clientele. Perhaps it's just the nervous reaction to a
new way of doing business, but regardless of the intent, it's a lovely
way to point out the vast differences between Retail and Wholesale
Direct. In summary, wholesale is the condition before the 300%
markups, radio ad jingles and stupid ads in the paper. Retail is quite
something else again."

Cash for Diamonds: Glossary
http://www.cash-for-diamonds.com/glossary.htm

"On average, retailers markup their diamonds 50-200% and gold 100-400%
from wholesale costs. Why? because of their overhead is so great.
These include security and theft prevention costs, property leasing
expenses, sales staff salaries and much more. However, the single
largest overhead expense is inventory."

DY Jewels: Jewelry Education
http://www.dyjewels.com/je_source.shtml

"There are a lot of things that you learn when you work with
gemstones. The biggest one is that the markup in your average
brick-and-mortar store is huge - 300% to 1000% or more!"

Gemstone Art: About Us
http://www.gemstoneart.com/about.html

"Markups are around 300% in most retail locations, guaranteed! I have
been in the jewelry industry since 1967, and went to work in the
business 'big time,' in wholesale manufacturing union professional
shops... In the old days in most towns the mayor, jeweler and bankers
were the most respected folks in town... Then the merchandising
companies started churning out strip mall stores, department stores
put in Fine Jewelry counters and the average intelligence of the
salesperson hit an all time low... When I was told by the guild
division district manager a while back they were charging a 380%
markup I knew the public was in trouble."

TradeShop: How Items Are Traditionally Priced
http://www.tradeshop.com/master/profit.html

"Most pretty catalogs you'll see in stores have nested 300% markups,
just watch for the term 'Keystone' (200% markups) or the more common
'Triple Keystone' term, which designates a 300% markup."

TradeShop: How Jewelry Merchandising Really Works 
http://www.tradeshop.com/master/wholesale.shtml

"FYI, keystone is a trade name which represents double the cost.
Triple keystone would mean the wholesale price would be one third of
the quoted price. For example, if something is $6000 keystone, that
means the trade can buy it for $3000. If the price is $6000 triple
keystone, then the wholesale price would be $2000."

DiamondTalk Forums: Clarity Enhanced Diamonds
http://www.diamondtalk.com/forums/printthread.php?threadid=9051

There's an informative chart in this article that shows the average
value of a 1/2 carat diamond gemstone from the time it is mined until
it reaches retail. A wholesale diamond sells for around $250 - $275.
By the time it reaches retail, it may be sold for $550. This article
applies to loose diamonds, but you can see that the markup is
considerable even for loose stones (scroll down to Figure 3 to see the
chart):

"The markup on a diamond increases exponentially as it moves down the
value chain. For instance, in 1981 the $18 billion retail value of
diamond sales dwarfed the $2 billion generated in sales of rough
diamonds."

Columbia Business School: The Global Diamond Industry
http://www-1.gsb.columbia.edu/journals/files/chazen/Global_Diamond_Industry.pdf

If you'd like to do further research on your own, this site may be quite useful:

Pricescope
http://www.pricescope.com/

Here's an interesting thread from the DiamondTalk Forum on the subject
of negotiating a price when shopping for diamond jewelry:

DiamondTalk Forum
http://www.diamondtalk.com/forums/showthread.php?threadid=4538

Google Web Search: "markup on" + "engagement rings"
://www.google.com/search?hl=en&ie=UTF-8&oe=UTF-8&q=%22markup+on%22+%22engagement+rings

I hope this information will be helpful. If anything is unclear, or if
a link does not function, please request clarification; I'll be glad
to offer further assistance before you rate my answer.

Best regards,
pinkfreud

I was happy to see your name on the answer, PinkFreud. I browse Google
Answers on a regular basis, and your answers are often well-researched
and well-written. This proved no different. Thanks for a great answer.

I often walk through Hatton Garden in London, on my way from the
Station to Gray's Inn, and I pass dozens of jewellers' shops ...
usually empty.

So they need a huge markup.

But what a waste of money.

We need to educate people away from such trivia.

A girl's best friend, indeed!

I asked these questions for myself, but I also hoped they might help
other guys looking for similar information. Juggler and PinkFreud
provided excellent answers, to both those ends.

I also found the following thread on Slashdot fascinating. It's quite
long, but well worth reading for the variety of stories and viewpoints
expressed.

"Diamonds - Are They Really Worth the Cost?"
<a href="http://ask.slashdot.org/askslashdot/02/08/13/2010256.shtml">http://ask.slashdot.org/askslashdot/02/08/13/2010256.shtml</a>

For all Google's functionality, it can't handle HTML...?

Sorry. Here's the flat URL, for anyone who was confused:

"Diamonds - Are They Really Worth the Cost?"
http://ask.slashdot.org/askslashdot/02/08/13/2010256.shtml

Great link, Cribcage.

Now that you and I are on the case, we've got to find a substitute.

But what?

Hi, Again, Cribcage

I've found a perfect substitute!

(And I didn't use that famous Search Engine.)

It's a ring-shaped 'smart card' that contains all the personal data of
the woman but it's heavily encrypted and it can only be read in
conjunction with a complementary 'smart card' held by the man. And
vice versa.

Whether or not it's practical is not the issue; it will be highly symbolic.

So, you may well ask: how do we go about developing this exciting concept?

Well, I thought that with your money and my brains, we would make a great team.

OK?

Bryan

Thank you very much for the five-star rating and the generous tip, and
many thanks for the kind words about my work. This was an interesting
question to research; made me very glad that my engagement ring was a
family heirloom, so my husband and I didn't have to be concerned about
being scammed by a jeweler!

~pinkfreud