I'm spiraling. My now-husband proposed last year with a 1.8ct round brilliant GIA Excellent, F-VS1 from a local boutique jeweler. Beautiful ring, I cried, said yes, the whole thing.
Last month I added it to our homeowner's insurance and had to get it independently appraised. The appraiser said replacement value is $6,800.
We paid $14,200.
I called the jeweler and he said "retail markup is normal in fine jewelry, insurance appraisals are replacement value not resale value, this is standard practice across the industry."
Is this actually normal? Or did we get taken? I've been sick about this for three weeks. My husband keeps saying it doesn't matter because I love the ring but I can't stop thinking about it.
Brutal but yes, unfortunately this is real. Independent jewelers typically mark up 50-100% over wholesale. A stone that costs them $7K wholesale sells for $12-14K retail. The "appraisal for insurance" number is meant to represent replacement cost — what it would cost you to replace it at retail if it were lost. The problem is many independent jewelers appraise their own pieces at the sale price or slightly above, which is a conflict of interest.
Blue Nile and James Allen cut this markup significantly because they operate at scale. The same 1.8ct F-VS1 GIA Excellent would likely have been $9,800-11,200 online.