Where Retail Prices Come From

When you buy a diamond from a retail jeweler, you're buying a stone that has passed through many hands: miners, cutters, distributors, brokers, wholesalers, and finally the retailer. During this journey, the diamond's price increases at each level as the middlemen add their normal profit markup.

Yes, that $10,000 diamond in your local shopping mall was originally sold to a distributor for much less, who sold to a broker who made his 10% commission, who sold to a wholesaler who added her 10% profit, who sold to a retailer for the going wholesale price. Retailers have to cover their expenses (paying employees, rent, etc.), so in the end you pay $10,000 when you buy the diamond. That's how the pricing game works.

Now let's see what happens when you sell a diamond.