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?