Rip off or bargain? Why do engagement rings cost what they do?

Why does it feel like the engagement ring costs so much money? Is it a bit of a rip off?  Read on to get a view what's behind this little piece of jewellery that means so much..

If you are planning on popping the question, you may have been putting it off because you’ve researched the engagement ring, and some of the costs seem ridiculous.

A 10ct diamond engagement ring is definitely pushing it on the budget front..

It isn't a level playing field with this purchase. Yes, some of the engagement rings out there are overpriced, but on the other hand, there is a lot that goes into creating the finished product you see; that you don't see - see?!  

I'm happier for my clients to feel that they at least have some idea of where costs are being driven, rather than just feeling it's a fait accompli. So if you are curious, this article is going to walk you through the various price drivers..

The Materials

Material costs in general are the most significant slug of the engagement ring budget.  They can be good and bad value, but there is a cost for obtaining the raw materials, which covers the amount of time that goes into extracting them.  Diamonds, gold, sapphires, and platinum are not sourced in the form you find them by the time they are ring shaped.  

Let’s take platinum, it exists in the ground in a fine form, in very few parts of the world.  It takes about 15 tonnes of ore to extract one ounce of platinum, over a period of about 6 weeks.  It requires a huge number of people to carry this out.  However, it doesn’t stop there, because it then needs to be fabricated into forms suitable for jewellery making.  Unsurprisingly it’s not cheap.  Gold, is also labour intensive (and with a lot recycled now) is unfortunately a currency which people dive into whenever economically they want something with stability.  

Diamonds, a girls best friend (and fiancé's frenemy?!)

Then there is the diamond market.  You can read all about the Four C’s here, but prior to that if you head upstream, there is a lot goes into diamond extraction, again, these aren’t finished crystals being found like in some Arabian Nights story!  So, in the first point there is the mining, and the extraction, and then numerous degrees of sorting, and then the selling of these rough stones, based on careful evaluation of what the cutting yield (number of commercial polished stones’ might come from each rough.  Then there is the cutting and polishing at which point there is verification of stone size, quality, and value.  The stone reaching the goldsmith or manufacturer is generally the second last step before the retail sale.  This is a long paragraph, but it’s worth looking up the diamond process, it’s fascinating and onerous!

It is not dissimilar with sapphires and other precious gemstones, and the outcome of all this is that the market goes in several different directions.  You can get industrial grade diamonds and sapphires, they don’t win any beauty contests but that isn’t the point of their use, and they cost very little as a result.  This is probably about 80% of all stones.  So then we go to gem quality.  The more of the characteristics deemed ideal they stone ticks, the more the price heads north.  The bigger the stone with better characteristics the more pronounced this is.  I’ve talked about this in other blogs, but it paints a picture for the starting point.

The Labour

Goldsmith working on engagement ring - the magnifiers are because it is obviously tiny details to take care of!

Now we’ve got these premium materials, now we head into the cost of making the ring.  With modern times, a lot of ring designs can be printed into wax models which are then cast in either platinum or gold, which saves a lot of time on the traditional way of making them by hand, making them more cost-effective.  You can see with this video though, there is a lot goes into this process.

Quite a number of retailers who sell high volumes of engagement rings purchase a significant amount of their stock overseas, where labour costs are lower than in the UK and thousands of each ring design will be made.  There are also plenty of overseas manufacturers from whom the jewellery costs are the same or higher than the UK depending on techniques used.  It is always cheaper to produce large quantities of a ring setting. Getting the jewellery back into the UK will still incur shipping and handling charges, import taxes as well as VAT. These are going back on the bottom line.

Moving on we then have the workshops and makers who create each ring individually and often by hand.  They may still utilise cast components – see my blog on cast jewellery versus handmade.  This is both the best and worst of jewellery making in the UK.  There are a lot of very talented and skilled goldsmiths out there, and there are also a disappointing number who aren’t. So at this stage, it's looking at your jewellery journey in the same way as you might in buying a kitchen, or car, or even a music system. It is what has gone into it which influences what comes out of it, and what that costs.

Anything that is made in large quantities will cost less than items made individually.  Where a ring has been designed to order, with diamonds or gemstones selected to specification, it is often going to be more expensive than a factory made equivalent. The only way that I can describe the difference is to illustrate that a Mercedes will always have a higher value than the Kia equivalent. At one level, they both do the same thing. On another level, they are very different in performance and make. This is up to the individual to decide what intrinsic ring value should be.

The Vendor

Yes, it's me with a client.. I know a thing or two about engagement rings..

So finally the jewellery reaches the store, or online vendor.  Obviously if it’s in store, then there are rents, rates, furnishings etc.  Some of this will still apply to online retailers.  There are staff costs, packaging, marketing materials and crucially; Insurance.  There are outgoings at every step of the journey.  Plus, in store, you have the advantage of being able to walk away with a ring immediately, but the retailer has had to retain the stock in order to do this. Online there is a lot of information to read, and sometimes a phone call as well. In store, it's face to face - having someone to build a relationship with, which is important to many when they are investing in this purchase.

The Verdict

Taking into account all of the above, there is a lot goes in to the engagement ring, which hopefully gives a little more idea on where the costs are being calculated from. Despite all this, in some instances the engagement ring is still a rip off.  I’ve had clients go to Hatton Garden, have engagement rings offered at one cost, and then heavily discounted when the sales associate thinks they might lose the sale.  (Note if you are reading this HG retailer – discounting doesn’t always create trust!). It is not unfair to assume that this means the ring has been heavily marked up in the first instance.

On the other hand, shopping online, there are rings which seem like amazing value, until you go into the small print (lightweight mounts, low quality diamonds, factory made jewellery) and then they are no better than the in store versions.  I’ve spoken about the pitfalls of buying diamonds online here.  There are plenty of characteristics that can bring stone price down.   This isn’t creating a more valuable ring.

The engagement ring is a forever piece of jewellery, and as such, you shouldn't be considering value in the short term. However, if you are curious, eBay can be a useful gauge of what second hand jewellery is selling for - and it is less than you think. We choose our diamonds and centre stones with the long term view that they should appreciate in value in time for their quality. But there is no point looking at this like stocks and shares, it's a long game.

Buying an engagement ring through a specialist

Despite the ups and downs that running a small business can present – I think my pricing is fair for every client.  I’d say that I won’t compromise on quality, and I don’t in terms of craftmanship.  But if a client wants a bigger stone, and has a smaller budget we’ll try and help.  This is based on me explaining to the client that it isn’t one of our Bond Street level stones they are getting.  It is horses for courses though, some clients want the very best stone for their budget, and some want the biggest.  Both may have to compromise on what they want, but we will make a pretty ring regardless.  There is a point when I’ll rule myself out of things, if I think there is no way I can help and charge them a fair price.  But in generally, we get through it all with a very happy client.

Visit our engagement ring page to get more of an idea on the different service levels we offer, or if you have an old ring you'd like to remodel into an engagement ring we have a page on this as well. Or just get in touch, you can always ping us a WhatsApp if you are trying to be discreet.

For other client experiences - see our reviews.

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