An October 5, 2005 news article on ABC News was titled, “Is There a Difference Between Tiffany, Costco Diamonds?” and addressed the question of if you can get a good value at both stores.
“Good Morning America” bought a diamond at Tiffany & Co for $16,600 and a diamond at Costco for $6,600 and then took it to an independent appraiser. The conclusion of the article seemed to be that both were good values.
You can read the article at http://abcnews.go.com/GMA/story?id=1197202&page=1 or view the video at the link at the bottom of these comments.
This article only pointed up to me the confusion surrounding the concept of good value. I tend to think of good value as the price I pay for an item or service relative to the quantity and quality of that service in meeting my needs. Let’s take a look at some of the aspects of that article:
The article said they purchased a round diamond, just over a carat in weight with F color and VS (Very Slight Inclusions) clarity grade at a price of $16,600 including a classic Tiffany setting. While we do not know the exact specifications of that diamond or the mounting, here is what Diamond Source of Virginia sells a diamond with the same description.
1.02 carat, AGS certification, F color, VS1 clarity, Ideal cut (AGS 0), Ideal polish, Ideal symmetry, No fluorescence, Hearts & Arrows pattern displayed, price under $8000 set in a platinum Tiffany style mounting for an additional $500 for a total ring price of $8500.
Assuming for the moment that these diamonds are equal in carat weight and quality that would mean the price difference ($8,100) between buying from Tiffany and from Diamond Source of Virginia would have to be attributed to factors other than the diamond itself. The article mentioned several factors that increase the perceived value of something bought at Tiffany so let’s take a look at some of those factors.
1) The article states that Tiffany has a unique policy that allows their customer to exchange a modest ring for something fancier years later. I have a hard time understanding why it is considered a positive. If the price of diamonds has gone up 30% as it has in the past couple of years, that means they are getting credit for something less than the diamond is “worth” if they bought it at a good price in the first place. They paid a premium price years ago in order to pay an even higher premium price in the future.
2) Tiffany, like most jewelry stores, offers to clean the ring and inspect the setting for the rest of your life. The fact is jewelry stores are happy to have you come into their store for any reason and most will clean your ring regardless of where you purchased it. They pay a lot of advertising to get folks into a store so they are happy to have you return on a frequent schedule in the hope you will see something else you like or maybe even upgrade your setting if the inspection show the prongs are weakening.
3) Tiffany does provide an intimidating shopping experience from the moment you open the large, heavy doors, the elaborate display cases and the polished marble floors. By the way, I wonder who pays for all that expensive retail floor space and furnishings. They continue to build on their brand all the way to the famous little box they put the ring in.
In other words, once you walk out of the store, your ring has lost 50% of its value as a piece of jewelry and the remainder of the price was for the experience of shopping in their store and for the bragging rights to say you purchased it at Tiffany. Even the appraiser in the article said that the average price of a similar diamond would be $10,500 at a typical jewelry store and attributed the price difference to the “value” of the Tiffany name.
I did not want to neglect the Costco part of the article either. It is too bad the ABS News staff did not at least try to purchase the same carat weight and quality of diamond. Then it would have made for a more interesting comparison. It is not very fair to compare an F color, VS clarity diamond with one with H color and VVS clarity, whether you are comparing them on appearance or just on price. Keep in mind that it is the cut of the diamond that produces most of the beauty and the article did not even mention the cut of these diamonds in considering their value although I’m sure the appraiser took that into consideration.
Obviously Costco needs to work on their employee attitude as to the quality of their merchandise. Even if their employees are not diamond experts, they should at least present their company’s products in a positive manner that stresses value and avoids comments like “We don’t carry the best of the best” even though that is typically the case.
For Tiffany, Costco and any other place you shop for a diamond, the certification is an important factor. While some of the diamonds at Costco have GIA certifications, most are EGL certifications. The article did not mention what certification the Tiffany diamond had but the Tiffany web site proudly states that they prepare their own diamond certification reports.
Appraisers are put in an awkward situation when commenting on the difference between diamonds purchased at Tiffany, Costco or from a company like Diamond Source of Virginia. It seems that the purpose of an appraisal is to determine the specifications, characteristics and the replacement value of the item being appraised. It should not be an endorsement or evaluation of the retailer who sold the item. Yet appraisers will consistently value diamonds higher if they know they were purchased at Tiffany or other high end jewelry stores than if they were purchased from a company with lower overhead and thus lower prices, even if the diamonds are the same.
The bottom line for the diamond shopper is that they need to not only educate themselves about diamonds so they get the best diamond for their money, they also have to determine how much of a premium they are willing to pay for the privilege of buying in a name brand store.
At Diamond Source of Virginia, we think the best strategy for most shoppers is to get the best price for quality diamond and then go walk through the Tiffany store for free. With the money engagement ring shoppers save, they can buy a much bigger diamond, pay for the honeymoon or both.
Thank yo for this entry,"Tiffany or other high end jewelry stores than if they were purchased from a company with lower overhead and thus lower prices, even if the diamonds are the same." nice information thanks for this.
by: rhianne
Posted by: tungsten wedding band | May 17, 2009 at 10:53 PM