"Suggested Retail Prices" for Diamonds?
The new Idex “manufacturer suggested retail price” (MSRP) list for diamonds, which was recently endorsed by, and will be disseminated by, the World Federation of Diamond Bourses in Antwerp, is intriguing, but I can see it being controversial as well (as, to be fair, virtually all price lists are). Idex CEO Abraham Stern spoke with me about it today:
- The MSRP will be derived from two components: The wholesale diamond price, and the retail mark-up.
- The wholesale prices come from the listings on the Idex network. However, a statistician will determine a formula to skew the prices towards the high end (so that they are “high asking prices”) and eliminate outliers. The list will be issued on a monthly basis, although it could come out more frequently if something major happens. Once the methodology is determined, there will be “no human intervention” in its derivation.
- The “customary retail markup” will be determined by surveying the market, with different mark-ups for the different segments – for instance, the mark-ups on small stones will be bigger than the mark-ups for big ones. The mark-ups will also skew towards the high side. The retail mark-ups, once determined, will remain relatively stable, though could be reconsidered “if there is a sea change,” Stern says.
- The list will be marketed to consumers. “We will tell them that these prices are the maximum price they should ever pay,” Stern says. “That’s the ceiling.” They will also be featured on the diamonds.ebay.com site, which we talked about a while back.
The list will be audited by a third party, most likely one of the big accounting firms. There will also be a board, comprised of trade members, overseeing it.
There is more information at diamondmsrp.com, where Idex is also soliciting trade opinion (the list is currently in “draft mode.”) What do you think?
CandiceM commented:
How will a system with "no human intervention" be able to determine the price difference in a well made diamond and a poorly made diamond? This an the most obvious move I've seen yet that makes diamonds "just another commodity". Will it make any sense to sell anything but poorly made diamonds to make any kind of profit?
suggested retail prices commented:
U.S. Anti-Trust laws against Price Fixing as well as State & Federal Laws against False & Deceptive price advertising should make short shrift of this proposal.
WeismanWiseman commented:
This is a little scary giving consumers a "ceiling" but I see what IDEX is trying to do. They are trying to give consumers a "blue book" if you will. This feature is going to make retailers have to look at their honesty and business plan...However I think it will help retailers like myself too...it could be an advantage if you use it in your sales presentation. Having the WFDB behind anything gives me a little assurance.
Frank commented:
I think it would be okay for Idex to tell retailers what the retail price should be as long as the retailers get to tell Idex what the cost should be. Seems fair to me!
iseller commented:
Nice of them to provide a "preview" only to those willing to pay $70 per month for access. IDEX research and articles have always been useful, but we found the online experience to be lackluster. I was hoping to preview whether there is an appropriate price difference between GIA and inferior reports. When is this officially expected to be public?
Yoram F. commented:
“We will tell them that these prices are the maximum price they should ever pay,” Stern says. “That’s the ceiling.”
I am confused!!!
Clark McEwen commented:
This concept is full of flaws...having said that, it will be effect in one way and one way only...that being the proliferation of the idea that our product is something to be discounted...it appears that IDEX (with the endorsement of the WFDB) have taken it upon themselves to try and convert our industry into nothing more than a group of discounters...there is a reason why the world's top luxury brands forbid discounting...this is yet another example of our industry's self destructive nature!
JRockNRoll commented:
I really don't see a point in this other than getting IDEX and gemstoneking some free publicity from eBay. Are they hoping to befuddle consumers with exorbitant discounts from this imaginary retail price?
inc commented:
Why can a statistician determine a retail markup, is this not the merchants decision? When was the last time an accounting firm every sold anything except bad advise, lets just put the diamond market on the supply side of pricing and watch what the current demand does to pricing. We have a surplus of product holding to a high price and when it breaks the diamond business is done.
