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You don't "keep your prices high". Your prices reflect the market price now (whereas they didn't before). Auctions ensure that the market price is found by inv

You don't "keep your prices high". Your prices reflect the market price now (whereas they didn't before). Auctions ensure that the market price is found by inviting a significant number of participants.

chc 12y ago
Then why do used diamonds go for such a small fraction of the price?
- bluedevil2k 12y ago
  Ask your significant other if she wants a diamond that was owned by someone else before her. In all seriousness, do not confuse the price of a rough diamond with the price of a polished diamond at a retail store - there's likely a 100% markup. If you were to trade in used rough diamonds, you'd find the price close to freshly mined rough diamonds (though the profit margin for the cutters/polishers is tiny).
  - judk 12y ago
    Your SO would never know the diamond's history if you didn't chose to share it.
    - irq 12y ago
      Nothing says "true love" like jewelry deception...
      - Jedd 12y ago
        And diamonds are nothing like true love. http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit http://blog.priceonomics.com/post/45768546804/diamonds-are-b...
      - CalRobert 12y ago
        If they need a diamond they aren't worth your time.
        jljljl 12y ago
        To be fair, if you promise a diamond but then deceive about it's origin, you probably aren't worth their time either.
        CalRobert 12y ago
        Eh, just as well then.
- rayiner 12y ago
  A high quality diamond with GIA paperwork intact won't lose much value second hand. The problem with most retail rings is that they use low quality diamonds and sell at a large markup based in branding. Its like buying generic PC's at Best Buy. You'll lose a ton on resale even on a lightly used item. Not just because of the retail markup, but because there are thousands of SKU's which makes price discovery inefficient.
- amalag 12y ago
  Because the person buying it new bought it overpriced. Real quality gemstones do not have a new/used stigma as long as they have the proper paperwork. There is some loss in price if they are set because the market shrinks as people see the new setting, they may have a different setting in mind. But people buy overpriced jewelry for the design or name or because they don't know the industry standards which is simply a GIA or similar certificate.
bane 12y ago
My prices can be whatever I want, I can price them under or over the market as I wish. I might not stay in business, but there are valid reasons for doing either. For example, I want to beat my competitor. So why I don't I dump diamonds on the market at some ridiculous price and eliminate De Beers virtually overnight? Once I've cornered the market and have a monopoly, I can start to jack up the price again saying whatever I feel like (there's a new diamond shortage) and charge whatever people are willing to pay, which would hopefully be eventually close to what the market was paying before or even higher. Or I might sell my diamonds at a price higher than De Beers and make some marketing claim that my Diamonds are only of the highest and rarest quality for <insert reason> and if I do a good job and am lucky get people to move up to my price. Or I might certify my Diamonds with a 100% money back guarantee within 1 year of purchase or some nonsense (betting that most people won't sell back their Diamonds that soon after purchase, but using that guarantee to justify the higher price) or whatever. I can keep my prices at De Beers' high price or do whatever I want. The Market merely informs me of what will sell, defining the envelope of how I can manage my business to stay in business.
- acchow 12y ago
  A challenger can't undercut an incumbent and drive them out of business. Who would finance such a move? And why wouldn't that financier back the incumbent instead? In reality, it's this opposite case that occurs. This practice is generally considered anti-competitive and illegal.
  - bane 12y ago
    It's done all the time, and it's on the front page of HN probably multiple times per week.
    - bluedevil2k 12y ago
      It's done by companies with small barriers to entry - if you wanted to be a startup in the rough diamond world, you'd need billions of dollars in start up capital, and access to a mine that's producing diamonds, which aren't just lying around. Figure billions more to buy a mine. Even then, you might get 3% market share, not enough to meet demand or alter prices in any way.

chc 12y ago

Then why do used diamonds go for such a small fraction of the price?

bluedevil2k 12y ago
Ask your significant other if she wants a diamond that was owned by someone else before her. In all seriousness, do not confuse the price of a rough diamond with the price of a polished diamond at a retail store - there's likely a 100% markup. If you were to trade in used rough diamonds, you'd find the price close to freshly mined rough diamonds (though the profit margin for the cutters/polishers is tiny).
- judk 12y ago
  Your SO would never know the diamond's history if you didn't chose to share it.
  - irq 12y ago
    Nothing says "true love" like jewelry deception...
    - Jedd 12y ago
      And diamonds are nothing like true love. http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit http://blog.priceonomics.com/post/45768546804/diamonds-are-b...
    - CalRobert 12y ago
      If they need a diamond they aren't worth your time.
      - jljljl 12y ago
        To be fair, if you promise a diamond but then deceive about it's origin, you probably aren't worth their time either.
        CalRobert 12y ago
        Eh, just as well then.
rayiner 12y ago
A high quality diamond with GIA paperwork intact won't lose much value second hand. The problem with most retail rings is that they use low quality diamonds and sell at a large markup based in branding. Its like buying generic PC's at Best Buy. You'll lose a ton on resale even on a lightly used item. Not just because of the retail markup, but because there are thousands of SKU's which makes price discovery inefficient.
amalag 12y ago
Because the person buying it new bought it overpriced. Real quality gemstones do not have a new/used stigma as long as they have the proper paperwork. There is some loss in price if they are set because the market shrinks as people see the new setting, they may have a different setting in mind. But people buy overpriced jewelry for the design or name or because they don't know the industry standards which is simply a GIA or similar certificate.

bane 12y ago

My prices can be whatever I want, I can price them under or over the market as I wish. I might not stay in business, but there are valid reasons for doing either. For example, I want to beat my competitor. So why I don't I dump diamonds on the market at some ridiculous price and eliminate De Beers virtually overnight? Once I've cornered the market and have a monopoly, I can start to jack up the price again saying whatever I feel like (there's a new diamond shortage) and charge whatever people are willing to pay, which would hopefully be eventually close to what the market was paying before or even higher. Or I might sell my diamonds at a price higher than De Beers and make some marketing claim that my Diamonds are only of the highest and rarest quality for <insert reason> and if I do a good job and am lucky get people to move up to my price. Or I might certify my Diamonds with a 100% money back guarantee within 1 year of purchase or some nonsense (betting that most people won't sell back their Diamonds that soon after purchase, but using that guarantee to justify the higher price) or whatever. I can keep my prices at De Beers' high price or do whatever I want. The Market merely informs me of what will sell, defining the envelope of how I can manage my business to stay in business.

acchow 12y ago
A challenger can't undercut an incumbent and drive them out of business. Who would finance such a move? And why wouldn't that financier back the incumbent instead? In reality, it's this opposite case that occurs. This practice is generally considered anti-competitive and illegal.
- bane 12y ago
  It's done all the time, and it's on the front page of HN probably multiple times per week.
  - bluedevil2k 12y ago
    It's done by companies with small barriers to entry - if you wanted to be a startup in the rough diamond world, you'd need billions of dollars in start up capital, and access to a mine that's producing diamonds, which aren't just lying around. Figure billions more to buy a mine. Even then, you might get 3% market share, not enough to meet demand or alter prices in any way.