As technology advances, we are seeing more trends favoring lab-grown diamonds, mainly because of the lower carbon footprint they produce when manufactured. Lab-grown diamonds are a good alternative since they have all the characteristics of a natural-mined diamond but cost substantially less.
However, the resale value is also lower compared to mined diamonds. But you wonder, “What is the resale value of lab grown diamonds precisely?”. Well, the resale depends on several factors and today we are going to understand those key factors.
What Factors Impact the Resale Value of Lab-Grown Diamonds?
Here are the key factors that impact the resale value of lab-grown diamonds:
1. Perception and Desirability
The widespread belief that lab-grown diamonds are not “real” diminishes their market value. The persistent belief that they are inferior or “fake” reduces their resale value to about 20%-30% of their initial purchase, in contrast to mined diamonds, which may fetch roughly 50% again. Another challenge is changing people’s perceptions of lab diamonds: they need secondary market value and collectibility.
2. Quality Certifications
Lab diamonds are more credible and valuable when they have quality certification from reputable grading laboratories like the GIA and AGS. Documentation confirming a stone’s measurements in areas like cut, clarity, color, and carat weight may serve as a guarantee of its authenticity. Inconsistent and incomplete grading systems make it hard to agree on common wholesale price criteria.
3. Brand Reputation
Consumer familiarity leads to greater resale prices for well-established brands from main manufacturers, such as Lightbox and Ada. Similarly, buyers feel more secure when they shop at online secondary marketplaces that focus only on lab-grown diamonds. However, it is still difficult to resell generic items widely; even for big, high-quality stones, finding interested parties takes time.
4. Niche Appeal
The jewelry industry is still in the process of gaining acceptance of lab-grown diamonds; nonetheless, there is still a very small pool of buyers who are actively looking for them in secondary markets. Prices are lowered as a result of this reduced demand since there is no competitive bidding competition.
5. Categorization Uniqueness
Lab-created diamonds have only been available for purchase for the last ten years; therefore, the norms on proper resale pricing and baselines have not yet been established. As a result, values are unknown. The amount of historical data that is available to use as a benchmark is restricted.
6. Rapid Technological Progression
On an annual basis, the production methods and techniques that are used to cultivate lab diamonds continue to make remarkable advancements. As a result, earlier lab diamond goods seem to be out of date or inferior in comparison to the standards that are now in place, which hinders their ability to be resold.
7. Regulation Lacking
Because there are no certification criteria or supervision in the manufacturing of lab diamonds, it is possible for unreported man-made composites or stimulants that are masquerading as “lab diamonds” to enter the market, which undermines the integrity of the industry. When considering resale items that do not have GIA or AGS reports, this causes purchasers to be suspicious.
8. Patent Protections
Only a small number of the most well-known companies have been successful in obtaining patents for distinctive diamond manufacturing methods that produce quality suitable for jewelry, which results in supply restrictions.
Notable examples of companies that control the flagship processes are Lightbox (DeBeers) and Pure Grown Diamonds. Because of this protectionism, there is no competition in pricing.
9. Size Parameters
Very small lab diamonds (less than 0.25 carats) have a microscopic resale value since the profits from producing tiny cuts are diminishingly significant. When it comes to pricing, the majority of consumers are reluctant to pay for huge lab diamonds that weigh more than three carats since these prices are comparable to or even beyond the prices of real diamonds.
10. Brand Differentiation
Major brands such as Ada Diamonds, which invests a significant amount of money in advertising, and Lightbox, which capitalizes on the relationship with DeBeers, fetch huge branding-related premiums, which are 10 to 15 percent more than the prices of unbranded items. However, 99 percent of manufacturers are unable to differentiate their products.
11. Segmentation of Channels
A centralized digital marketplace that allows for the listing of resale stones is inadequate for the hundreds of jewelry dealers, independent sellers, and lab diamond suppliers. Values are lowered as a result of this fragmentation since purchasers are unable to quickly price and compare merchandise in a standardized environment without complication.
Related: How to Tell If A Diamond Is Real?
What Is The Resale Value of Lab Grown Diamonds Compared to Mined Diamonds?
When compared to diamonds that develop naturally underground over billions of years, the resale value of lab-created diamonds is now far lower. On secondary markets, high-quality natural diamonds may return around half of their initial investment, whereas synthetic diamonds usually only recover about 20-30%.
Despite lab-grown diamonds looking and feeling the same as mined diamonds when graded to colorless, flawless quality standards, there are several reasons why they attract so much more money:
1. Perception Challenges
A significant part is played by feeling since the marketing of diamonds over many decades has firmly established in the minds of customers the inherent link that exists between natural stones and the concepts of romance and elegance. Many consumers see lab diamonds as less precious or unique since they are man-made, which goes against these strong emotional connections.
2. Pricing Constraints
Lab diamond firms can’t accomplish efficient cost management due to the high production costs connected with sophisticated and high-pressure growth procedures. As a result, their retail ceiling prices are far closer to being on par with the costs of mined diamonds than what is realistic for resale value.
This compression impact on profit margins, which is connected to continued expenditures in research and development, prevents natural diamond value retention rates from being substantially undercut.
3. Market Infrastructure Limitations
Determining the value of lab diamonds effectively is made more challenging by the fragmented structure of lab diamond manufacturers, the absence of industry grading standards, and the absence of centralized markets for reselling stones.
Diamonds that are mined have benefited from centuries of carefully managed supply and demand interaction throughout integrated value chains, which is an ecosystem that has not yet reached its full maturity for producers of man-made diamonds.
|Lab Grown Diamonds
|Standard Resale Rate
|Perceived as a sentiment piece
|Highly desirable, special
|Stigma as “fake”, less valuable
|Standard Grading System
|Well-established (GIA grading)
|Inconsistent, no unified standards
|Years of well-managed supply networks
|Producers in specialized markets that are still developing
What Factors to Consider When Buying Lab Diamonds for Resale?
The following factors to consider when buying lab diamonds for resale are as follows:
1. Quality Grading Certifications
Confirming color/clarity designations and cut proportions with official grading reports from the Gemological Institute of America (GIA) or the American Gemological Society (AGS) increases credibility and objectively confirms specifications to potential purchasers, as opposed to self-graded claims. Documentation is also helpful in determining resale asking prices that are profitable while yet being competitive.
2. Minimal Color Saturation
When compared to lower color grades, lab diamonds that are rated as D-F on the color scale and have very little to no detectable yellowish tinting have a greater attraction among possible buyers of resale diamonds. Get the most out of your stone’s resale value by keeping it as colorless as possible.
3. Traditional Cuts: Princess and Round
The research that shows that these straight-edged cut styles have a higher relative value retention makes it practical sense to stick to evergreen designs that are considered to have a lesser “risk,” such as round brilliant and princess cuts. It is common for more odd forms to appeal to more specific niches.
4. Moderate Carat Sizes
The resale value of rounds tends to concentrate in the area of 0.5 to 1.5 carats in weight, which is good for striking a balance between increasing product content and avoiding the price jump of up to 2 carats, which is often where buyer interest stops.
5. Brand Reputation
Leading laboratory brands like Lightbox and Ada, who make substantial investments in consumer marketing and public relations awareness centered on their patented growing processes, attract considerable resale price premiums in comparison to the multitude of lesser generic providers that lack brand distinctiveness.
6. Use Niche Listing Platforms
Instead of generalist websites, lab-diamond-focused online marketplaces, such as Ada Diamonds’ resale site and Yadav Jewels, are where knowledgeable purchasers consciously discover and price compare lab-grown goods. This is where optimized resale success may be found.
Suggested Read: How to Tell If Pearls Are Real?
Is Buying A Lab-Grown Diamond A Good Decision?
A real alternative to costly mined diamonds, lab-grown diamonds are a great option for environmentally aware and budget-sensitive diamond purchasers. The quality of lab-created diamonds has improved to the point that they are almost indistinguishable from mined diamonds. Decisions on what is genuine and what is artificial ultimately boil down to individual values, economic considerations, and concepts of “realness.”
Anyone looking to get their hands on the biggest synthetic diamond for the buck may do so via synthetic channels. I can produce immaculate super-ideal cuts up to five carats before the price approaches what you would pay for a genuine diamond, according to top lab diamond companies.
And with typical retail savings of 30–40%, budgets for any particular 4Cs quality grade open up considerably. Buyers who aren’t concerned with long-term investments care less about resale prices, which fall behind.
Lab-grown diamonds are becoming less stigmatized as technology advances and more people learn that lab diamonds look and feel much like natural diamonds. They also draw in more progressive, younger couples with their socially conscious branding. Nonetheless, “mined origin only” practices persist in many communities.
What is the reason behind the low resale value of lab diamonds?
A new product category without value standards, a disjointed reseller market with little knowledge, and the lingering assumption that they are less “real” all contribute to this. Limitations in supply among the few large companies that have patented their products are another problem.
Which brands of lab diamonds hold value better?
Those with significant brand marketing, like Lightbox and Ada, attract price premiums of 10-15% above generic lab diamonds. This is because consumers are more acquainted with these brands, which helps them resell more effectively.
Where to resell a lab diamond?
Ada’s resale site, Yadav Jewels, and other specialized online secondary markets for lab-grown diamonds can generate the best valuations since they are comprised of buyer pools who are well-educated. The local jewelry stores are not likely to pay reasonable prices.
Why lack of lab diamond regulation impact resale value?
When there are no needed certifications or product control, the market is left vulnerable to the possibility of fake diamonds being sold as genuine diamonds. This undermines the market’s credibility and causes purchasers to be more cautious.
Do antique/vintage lab diamonds charge a higher price?
Because the technology itself is less than twenty years old, the answer is no. As of right now, every single lab diamond inventory is deemed to be contemporaneous. Provenance does not yet have a significant influence.
How do jewelers easily tell the difference between lab and mined diamonds?
According to the trained eye, based on the slight spectral changes. This provides yet another obstacle for private sellers who are attempting to dump their inventory stealthily to local retailers.
Suggested Read: Everything You Need to Know about Antique Jewelry Appraisal
In conclusion, although mined diamonds retain roughly 50% of their initial purchase price, lab-grown diamonds only resale at 20-30%. The economics of resale are hindered by stigma, irregular grading, a lack of producer consolidation, and an underdeveloped market infrastructure.
Those who value ethics or saving money more than making a financial gain should purchase lab diamond jewelry more for the pleasure it brings to one’s daily life than for the hope of future profit. Popular brands such as Lightbox and Ada, as well as secondary markets that focus on lab stones, may improve the results to some extent.
Still, vulnerability will be there as long as there is no change in consumer sentiment or control of the supply. Considering the forces at play, it is more important to purchase lab diamonds for ethical reasons than for the sake of retaining financial worth.