We were never fans of the shopping experience we had at most jewelry stores, so when we opened our little shop back in 2005, we set out to create an experience that we would feel good about if we were customers.
Our core pricing philosophy is simple - we price our products and services at a fair price every day. No games. No gimmicks. Here are a couple of the “don’ts” that are inherent in that philosophy:
Don’t mark up our prices so that we can mark them down and call it a “discount” or a “sale”
Don’t offer or advertise gimmicks that make customers feel like they are getting a great “deal” when they are not
Don’t run a continuous stream of sales so only the customers that buy during a sale are getting a fair price
What is a diamond trade-up program?
So let’s talk about diamond trade-up programs, how they work, and if they make sense to you as a customer. On the surface, a trade-up program looks really attractive – get credit for the full price you paid for your diamond and apply it to the purchase of a new bigger, better diamond. How can you go wrong?
Like anything… the devil is in the detail. There are always conditions and restrictions that apply to these programs. Let’s take a look at what’s common across almost every trade-up program:
You can only participate in a trade-up program at the retailer that sold you the original diamond.
You have to spend at least twice the amount of the original purchase price on your new diamond.
Sale items, discounted items, and coupons are typically excluded.
You can only trade a natural diamond for a natural diamond and a lab diamond for a lab diamond.
Might still look like a good deal, right? Here’s what you need to know.
In stores that rely on discounting, special financing, and frequent sales to entice customers to buy, their core pricing strategy is to mark up so they can mark down. The purpose of this strategy is to give customers the illusion that they are getting a deal. Trade-up programs typically exclude sale items, so given the fact that their pricing strategy is to use high mark-ups for their retail prices, you could be grossly overpaying for your new diamond.
If a customer overpaid for the original diamond, the problem compounds itself because the customer will be required to buy a new diamond priced at least twice as high as the original. Let’s say you overpaid by just $250 on the original diamond. That means there is an extra $500 already built to the price of the new diamond that shouldn’t be there.
Determining the market price of a diamond is complex because there are so many variables to diamond value - size, color, clarity, cut, polish, depth, proportions, size of the table, etc. Be aware that some retailers are selling inferior quality diamonds using less reputable diamond certificates to establish artificial value. All diamond certificates are NOT created equal. GIA certificates are the gold standard. There are several diamond grading labs out there that provide certificates that exaggerate the quality of a diamond. This allows some retailers to use certificates that exaggerate diamond quality and price to convince you that a diamond is worth more than it is.
What is an example of how a diamond trade-up program is used?
Here’s a great example of something that happened at our store this week (and what prompted me to write this blog). A really great customer called to tell us that she was going to one of the large jewelry retailers (begins with a “J” and ends with “ared”) because they would let her trade in her 1-carat lab-grown diamond for a new 1.5-carat lab-grown diamond and she would only need to pay $1,500 for the upgrade. She was certain she was getting a great deal and wanted to know why we didn’t do this.
Let’s break this down a bit… If she is paying $1,500 to upgrade her diamond:
The price of the new 1.5-carat lab-grown diamond is at least $3,000 since trade-ups require that the cost of the new diamond is at least double the cost of the original diamond.
The customer is giving the retailer the $1,500 diamond she originally purchased.
We asked our customer to provide more detail on the quality of the new diamond so we could tell her if she is getting a good deal or not. If she were getting a good deal, we would absolutely tell her that.
We called a couple of our suppliers and then called her back to let her know that our regular price for an equivalent quality 1.5-carat lab-grown diamond would be about $1,500 – half the price of the other retailer’s diamond.
This was not such a good deal for our customer.
Why K. Hollis Jewelers doesn't have a diamond trade-up program
So, the bottom line for our customer:
Our everyday price was half of the other retailer’s retail price for the new diamond.
She was able to keep her original diamond.
She was thrilled and is using the original diamond to create a new diamond pendant.
We’re not saying that a trade-up program is necessarily a bad thing. A trade-up program can be a good value for a customer as long as they paid a fair price for the original diamond, they are paying a fair price on the new diamond, and they can afford to buy something that is twice as expensive as the original. The most important thing is always to work with a jeweler that you can trust, and that will stand behind everything they sell.
At K. Hollis Jewelers, we price our products and services fairly every day, so you don’t have to worry about overpaying or feel like you need to wait for a sale to get a fair price. The products we have on clearance are discounted from our everyday fair prices, so they really are a great deal. No illusion. No games. No gimmicks. When our customers want to upgrade a diamond, we’ll price everything fairly, give them a reasonable offer to buy their diamonds and gold, won’t require them to spend at least twice the price of the original diamond, and we don’t require that they purchased the original jewelry from us.
We just feel this is a more honest and transparent way to treat our customers.