Lab-Grown Diamonds: The Economics Nobody Talks About

The public conversation about lab-grown diamonds focuses on consumer choice and environmental claims. The industry conversation is about something much more concrete: the economics are changing faster than most retailers have adjusted for.

CVD diamond production costs have fallen roughly 80% in the last three years. A 1-carat, D-color, VVS2 lab-grown diamond that cost $1,200–$1,500 to produce in 2021 now costs $200–$300 at scale. Retail prices have followed — but not as fast. The gap between production cost and retail price is where the current margin opportunity sits.

The challenge is that this gap is compressing. Online retailers and direct-to-consumer brands have driven retail prices for lab-grown solitaires below $1,000 for 1-carat rounds, and below $500 for lower-clarity goods. For traditional brick-and-mortar retailers who adopted lab-grown as a complement to natural, the margin story has shifted from 'similar margins on lower price points' to 'declining margins on declining price points.'

Where this leads is a strategic divergence. Lab-grown diamonds are increasingly becoming a commodity input rather than a premium product. The retailers who will profit from them long-term are those who treat them as a design material — using them abundantly in fashion-forward pieces where total carat weight creates impact — rather than positioning individual stones as investment-worthy items.

The next phase of this market will likely see lab-grown diamonds priced like other manufactured gemstones — cubic zirconia set the precedent decades ago. The question for retailers isn't 'will this happen?' but 'when, and how do I position my business for it?'

Our recommendation: maintain both categories, be transparent about what each offers, and ensure your branding doesn't tie your entire identity to either one. The retailers who will thrive are those whose value proposition transcends the stone type — design, craftsmanship, service, and story.