Some diamond rings are expensive. Indeed, most diamond rings are expensive – and few people who have seen the price tags they tend to come at would argue with this fact. But why do they tend to cost that much?
Well, one reason the expensive diamond rings cost what they do is simply because the material they are made of, the said diamond, is not a cheap material. Pure diamond is one of the rarest materials (with only a few countries in the world naturally endowed with any quantities of it). Diamond is also one of the materials that are also extremely hard to extract –as the process of extracting diamond from the mines where it is found is a difficult and often dangerous one; and all these factors contribute to the high price tags the expensive diamond rings finally made out of it come at.
The rarity of the diamond is a particularly important factor here, keeping in mind that in basic economics, highly valued commodities that happen to get rare tend to have their prices rising, as the many people looking for them engage in price ways, bidding and counter-bidding, in an effort to be the ones who finally get them.
Of course, the difficulty involved in getting the diamonds is also an important factor in accounting as to why the expensive diamond rings cost what they do, because the difficulty in producing the diamond naturally leads to raised production costs that are eventually passed on to the ultimate buyers of the product. Incidentally, talking of the cost factors that go into the production of the expensive diamond rings, it is important to take note of the fact that the costly production does not end when the diamond has been processed into the rings, because even when the rings are in the hands of the ultimate vendors who sell them to wearers, they still have to be guarded very jealously (because robbers love them); thus raising their eventual cost even further.
Another factor as to why expensive diamond rings cost what they do is simply because they tend to belong to the class of goods that economists classify as ‘prestigious’ goods, goods that are bought simply for their prestige – and where the cost of the goods is one of the factors that goes into determining that ‘prestige.’ So here we end up with a situation where people are actually look to purchase the expensive diamond rings simply because they are expensive, and where they would actually not purchase them if their price were lowered!
Closely related to the ‘prestige factor’ in accounting as to why expensive diamond rings cost what they is the fact that they tend to be ‘big brand’ rings, rings that are marketed on the premise of their exclusivity. So here we end up with a situation where if their price was to fall, then every ‘Tom, Dick and Harry’ would be buying them, and they would therefore lose their exclusivity – effectively losing their value in the eyes of their buyers, who typically buy them in a bid to assert their ‘economic superiority’ over other less well endowed suitors, where the rings are being purchased for romantic expediency.
