You’ve come to learn that your diamond engagement ring has a number of different values over its lifespan, from initial purchase through resale. The center diamond is typically the most valuable component in a diamond ring and accounts for around 85% of the total retail value of the ring. But what about the ring setting? Why doesn’t it retain its value in proportion to the center stone diamond? Here’s all the information you need to know about a standard or custom engagement ring setting and its resale value.
What makes up the retail cost of a standard or custom ring setting?
It may come as a surprise to many, but the retail cost of a ring setting is mostly lost in the resale and recycled diamond market. But why is that the case? To start with, most people don’t want to buy a ‘used’ ring and as a result, rings are broken down to their components when resold into the secondary market. The only exceptions for keeping an original setting are signed rings or very rare vintage pieces that may demand a higher price if sold in their original form. These rare cases would often require the original documentation proving its rarity and authenticity.
When a ring is broken down to its components, you are left with the metal value and occasionally with small side stones or very small diamonds called micro-pave that account for about 10% of the diamond setting cost. So why is the ring so expensive in the first place? Let’s break down these costs for you.
The first cost of a ring setting to be accounted for is the retail mark-up. Retailers often mark-up the setting by 100% to create some margin and cover their overheads. As an example, a diamond ring setting that the retailer bought from a jewelry manufacturer at $750 would often be sold at $1,500.
Labor cost is often the second largest cost component of a diamond engagement ring setting
Whether it’s a standard or a custom engagement ring, the labor it took to design, manufacture, set, and finish the ring is a significant cost that needs to be accounted for. This cost often exceeds 50% of the ring manufacturing cost and cannot be recuperated when the diamond jewelry ring is resold. Instead, ring setting prices are entirely dependent on the value of the metal and any additional gems, if applicable.
How is the weight of my ring alloy determined?
Most standard and custom engagement ring settings are made from 14K gold, 18K gold, or Platinum which are commodities that have spot market prices. The purity of the metal combined with the weight of the ring is multiplied by the same day spot price and determines the standard or custom ring setting’s current market value.
During the melt process of all rings, around 1-2% of the original ring weight is lost in the process. But some alloys are not as pure as others and additional weight loss should be accounted for.
Platinum is the purest metal used in standard and custom engagement ring settings, and 90-95% of the ring is made of pure Platinum. However, that is not the case with gold. 18K gold is 75% pure gold and 14K gold is only 58% pure gold. The rest is a mix of other metals such as nickel, copper or zinc alloy. These make the ring stronger and also reduce its diamond setting cost. Gold in its purest form, 24K, is almost never used for jewelry designs due to the soft nature of the metal. The purer the gold, the easier it bends, warps, and scratches.
How to accurately calculate my standard or custom ring setting melt value
The melt value, also known as scrap value, is calculated using the net gold weight of the ring setting multiplied by the current spot price of the metal. Don’t be fooled, however: the metal market is based on pure 24K gold, which very few gold rings are made of.
To estimate your ring setting price, you can’t simply multiply the weight of your ring by the troy-ounce price. Instead, you need to deduct the weight of the other metals and account for the 1-2% loss during the melt process. For example, if you have an 18K gold ring weighing 2 grams and the current gold spot price is $44.72 per gram, you need to first calculate the weight of the pure gold in your ring (2 gram X 75% = 1.5 gram), deduct the 1-2% of melt loss (= 1.4775 gram) and only then multiply the pure gold weight by the gold spot price (1.4775 X $44.72 = $66.0738).
Sentimental value vs. melt value when determining the cost of a ring setting
By now it is clear that the value of a diamond ring setting at resale represents a fraction of what you paid for it at retail. So, what else can you do with the setting? If you’re feeling sentimental about your custom engagement ring setting, you can consider repurposing it and breathing new life into an old favorite. One option is to find a cheaper gem such as a beautiful colored stone and replace the center diamond. Another option would be to hammer down the gold into a new shape to wear as a pendant. Of course, you can always keep the setting for use someday in the future.
Mondiamo offers the market value for your standard or custom diamond ring setting if you decide to sell it. In the event that you choose to sell your center diamond, but wish to keep the ring setting, Mondiamo does that too. We’ll simply ship it back to you after removing the center diamond with as little damage as possible to the ring itself. We offer this service free of charge, as we understand how important it is to have options when it comes time to sell your diamond ring.