While jewelers’ margins can vary as much as the offerings in their stores, there seems to be a clear consensus on how to price colored gemstones and cultured pearls: Charge more than diamonds — up to three times more in some cases, depending on rarity.
The biggest reason is that diamonds have a price list — the one in this very publication — to provide insight into the industry’s pricing methods, which include considerations like abundance and quality. That benchmark doesn’t exist for colored gemstones or pearls; the main driver of their sales is the visceral emotion they inspire in collectors.
The rarer gemstones are largely untreated and nearly perfect in color, cut and clarity, while pearls with fine luster and large round shapes are prized over imperfect ones. But the in-between gem and pearl types with quirks and flaws charm many collectors into paying a premium for oddball finds.
In pearls, think oversize baroques or keshi specimens — the latter meaning “little mistakes” in Japanese; in gems, there’s enhydro quartz — a type of quartz with water pockets in it — or other included stones, as well as rarely seen colors, or material from notable sources that dried up quickly.
While colored stones and pearls offer a better markup than diamonds, retailers may need to work a little harder for the sales, since generic marketing like De Beers has done for diamonds does not exist for these other gems. Diamonds account for nearly 60% of all jewelry sales in the US thanks to years of powerful promotion for the category.
Here, three retailers weigh in on their gemstone margins, challenges, and most popular and investment-worthy items.
Clayton Bromberg, President, Underwood’s Jewelers
Markups: There are bigger margins on color and pearls, but the inventory turn is lower than on diamonds. Turnover and margin work together. Color hasn’t been commoditized, so you’re buying based on the individual beauty of a particular stone.
Top sellers: Royal blue and pink sapphires sell better than [Montana sapphires] in bridal because Montanas aren’t available in bigger sizes.
Return on investment: In 45 years of sales, bigger diamonds — 3 carats or larger — have offered the biggest return. But over the past few years, high-quality Big Three prices, especially emeralds and blue sapphires, have gone up the most in value.
Challenges: We don’t struggle to source, but we may find prices that we don’t want to pay. I wish my peers would read more about gemstones and pearls so they don’t share misinformation with customers.
Even people in the business struggle to know the differences in pricing gemstones, and most misinformation is given out by somebody who doesn’t know what they’re talking about. They don’t go to Tucson or understand how the markets work, whereas if they had more knowledge, they wouldn’t put out information that confuses clients.
Charles Marks, Jeweler and Owner, Marks Jewelry Co.,
Markups: We offer finished color goods in better-than-average quality at triple key prices. And I have a good color guy with deeper knowledge than me, so if I don’t think I’ll do a good job in a client presentation on color, I’ll let him explain it.
Top sellers: We sell basics in color like birthstone jewelry, and we can access all that we need thanks to good sources. If I can’t be competitive in pricing, I refer it out.
Return on investment: Precious rubies, emeralds and sapphires of the best quality and beauty offer the best, though once the diamond market finds its floor — right now, it’s in a free fall — [diamonds’] value will return.
Challenges: As the Greatest Generation starts to die, we’re seeing a lot of their jewelry come through the door. We’re concerned about pricing those pieces appropriately; they’re pre-owned, but we don’t want to price them so low that we harm our business.
Steve Weiss, President, Kirk Jewelers, Westlake Village, California
Markups: We get good margins in diamonds and gemstones, and sapphires do for us better than emeralds. Margins are a little on the flat side now, and it’s possible that it’s because of lab-grown diamonds, which we started carrying.
Top sellers: Our first major pearl sale of the year was an $8,800 South Sea necklace with gold bars purchased by a guy for himself. In bridal, we’ll set color into semi-mounts on request. We also have some pretty colored-stone rings in stock that can be bought and worn as engagement rings.
Return on investment: Color margins depend on price points, but in general, I mark up color at keystone [twice the purchase price] and diamonds to 1.5 to 1.7 [times the purchase price] on larger pieces.
Challenges: Not unique to color, but our traffic was way down for the year. Still, we had one of our better Decembers. Another issue is that everyone sells diamonds — customers know the 4Cs. If shoppers come into the store to buy a diamond, they could be romanced, but if they buy online, you don’t have the chance to romance the sale.
In color, you fall in love with a gem one at a time; color can be romanced. That’s how I sold a purple-sapphire and diamond ring to a client. A musician came in looking for a gift. I think he had a dollar amount in mind, but not a gem or category. He said his wife was getting a purple guitar for Christmas, and that’s why he fell in love with the ring.
Main image: From left: Clayton Bromberg; Charles Marks; Steve Weiss. (Underwood’s Jewelers; Marks Jewelry Co.; Kirk Jewelers)
This article is from the January-February 2024 issue of Rapaport Magazine. View other articles here.