Diamond Valuation or RRP - MEANINGLESS !!!

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Ever had jewellery valued ? ever been confused because of major price differnces in what you've bene told ? probably not because most poeple only get this done once and take to heart what they've been told !

The big issue is ‘What is Jewellery Worth’ & the difficult issue is that the answer varies very radically depending upon who you ask.

Let’s look at:

eBay Value
Recommended Retail Price
‘Real’ Retail Price
Valuation for Insurance
Valuation for Purchase by the Jeweler

1) eBay Value – this is the easy one; I think it can be argued that the value for something is the value that it sells for on eBay when the bidding ceases. Mind you, I do get a bit confused myself by this when we have the same article sells for $70 one week & the very next week another identical item sells for $310 ???

2) Recommended Retail Price – this price is usually supplied by the Supplier (or Wholesaler). This price is the ‘Full Sticker Price’ before any discounts & in the jewellery industry everyone wants to be known to be exclusive, so this price is usually set high.

3) ‘Real’ Retail Price – this is usually the Recommended Retail Price with a discount in the region of 30-70%. You ever notice how the big jewellery stores offer big 50% discounts in the middle of the calendar year when it’s quiet, but they still make money ?

4) Valuation for Insurance – This is very contentious; Many jewelers give valuation similar to ‘Recommended Retail Price’, which is fine until you actually make a claim ! Once you claim then the insurance company typically argues that the jeweler offering replacement should offer a discount; something more like the ‘Real’ Retail Price. Then the arguments begin !

5) Valuation for Purchase by the Jeweler – Firstly, the average markup in the jewellery industry is 300-1500% !!! Mind you, they do need to do this to cover the interest on expensive stock & pay rents in expensive Shopping Centers. So an item bought for $300 might have a recommended retail price of $1500. Discounted 50% to $750, you thought you got a great deal ! Then you went to another jeweler & he valued the item at $250, that’s because it’s the price he would want to buy the item from you at, since he can but it from his regular supplier for $300 anyway - but now you’re disappointed – right ? If he said ‘The Recommended Retail Price for this item would be $1500” – suddenly you’re not disappointed anymore – right ? Now you're thinking 'I got a good deal' again & everyone is happy

I put this theory to the test as we'd had a few spiteful incidents from regular jewellers in the past & I really wanted to test this all out properly & as scientifically as possible & so I went to four jewelers (two large Jewellery Chains & two small Private Jewelers) with a very nice 1.80 Carat White Diamond Ring which I figured was worth roughly $3000-5000 (‘Real’ Retail Price).

When I said I bought it on eBay my four valuations varied from ‘Worthless’ to $2000

Then two months later I sent my wife on the same trip to the same shops with the same diamond ring & she said the item had been in the family longer than she knew; the values then ranged from ‘Worthless’ to $12000 & interestingly they were different jewelers that said ‘Worthless’ each time despite the fact it was the same ring.

So are you confused now ? ....

Worse still, when I went myself on the valuation trip & was told ‘Worthless’ I asked the jeweler why the diamond was so bad that it would be worthless & the answer was disturbing; ‘You said you bought it from eBay so it won’t be real’ !!! My reply was; “What if I told you that I bought this diamond myself from a mine in South Africa when I visited” (not really 100% true but I wanted to know the reaction) & he very sheepishly looked at me & asked if I was from the Department of Fair Trade, obviously nervous at what the repercussions might be if I answered 'yes', but I just walked out.

Another gave a valuation of $500 & when I asked why the answer was equally disturbing; “You only get cheap stuff on eBay - it's not really good” & again my reply was; “What if I told you that I bought this diamond myself from a mine in South Africa when I visited” & he just as sheepishly looked at me & asked this time if I was from TV & when I said 'no' he immediately asked me to leave his store !!!

Beware of Jewellery ‘Valuations’ – the reality is that the regular store based jewelers are literally ‘Under Siege’ from eBay & they don’t like it at all ! I can understand they have a lot of money invested in stock & leases on shops but eBay is changing the retail world in a big way

Really what is eBay ??? – it’s the place where the world comes together to buy & sell; to reduce costs & pass those savings onto customers – right ? That's why eBay exists & the existing jewellery industry has some of the highest costs & overheads which means eBay can pass along the biggest savings to customers in this industry.

 So; bearing what you’re read, let’s recap…..

1) A major jewellery store buys a diamond from their wholesale agent for $1000

2) They arbitrarily with no thought at all say it’s worth $10,000

3) They then discount the diamond by 60% (so you think you’ll be buying a bargain) but the diamond was actually never on sale for $10,000 (or maybe it was on sale for a day or two so they can legally say that was the original price)

4) The alleged discount price is now $4000 & you walk in & buy this stone & you’re impressed because they give you an additional 10% discount because ‘they like you’ – you paid $3600 & you’re feeling good that you got a good deal, after all it was $10,000 discounted down to $3,600

But what is this diamond really ‘worth’ ?

The jeweler will say $10,000 (unless it’s from a competitor in which case they will say $1,000 because that’s the price they want to buy the stone at & of course their products are always superior quality to everyone else’s)

The wholesale agent will say $1,000 (but the buyer will never be able to meet him – he’s overseas buying more stock & never sees the general public

The eBay retailer like myself will say something like: ‘whatever it sells for’, is it’s ‘worth’. If you push me I might say something like $1,200 to $1,800 – a bit of a guess but sounds reasonable

The insurance company knows about what retailer’s do regarding ‘valuation’. They insure for the $10,000, but if you ever go through the process to make the claim, they will insist on using their own jewelers to make the replacement & therefore pay a price very much closer to the wholesale agent price.

The pawn broker will say something like $500 – they’re always after desperate people who want money fast

So confusion reigns !!!

Remember arguably the most famous diamond retailer in the world has a policy of never offering to rebuy diamonds bought from them because their offer to rebuy at whole prices would offend the customer !!! It’s true – research this if you don’t believe me


Special Notes:

Note 1 --- 14 Karat Gold !!! It's very common in the USA, but not common in Australia (9 & 18 Karat is much more common in Australia). Jewellers automatically assume a ring is sourced from eBay as soon as they see 14K Gold !!! So don't think you have an independant valuation on your 14K ring by not mentioning eBay - Likewise for 10K gold.

 


We have a large range of items at NRS-Diamonds & are constantly updating our stocks (http://stores.ebay.com.au/NRS-GEMS-and-DIAMONDS)

And just in case you’re not happy with your purchase we offer refunds as detailed in our eBay advertising & we’re always happy to provide advise.

We want happy customers who think so much of us that they come back time & time again!

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