{{Uh oh...here we go again – after gold prices hitting the roof, its polished and rough diamond prices going sky high next. The classic “demand exceeding supply” case is at play here. Diamond manufacturers have already upped prices by 15-20%, and by September 2011, another 20% increase is on the anvil. Retailers are obviously all agog with excitement (though not in a very nice way...) It’s a dual dilemma for the retailer – with both gold and diamond prices up, the only option available is to pass on this increase in price to the consumer. And yet, there may be some avenues to soften and minimise the effect of the impending price increase...A little care taken now will ensure that sales do not go into a downward spiral when it truly matters – during the peak festive and wedding seasons... Here’s what to do...}}%%

{{1. Alter your design fundamentals:}} Diamond prices rise exponentially with carat and weight. So, jewellery using diamonds that are even a little smaller are bound to be significantly lower in cost than their bigger counterparts – big may not necessarily be better and tweaking designs to use smaller stones rather than larger ones is an extremely viable option. Another way is to use smaller diamonds in a setting that makes it appear as a single big diamond. Coloured gemstones are another option worth exploring – especially in designs where one would originally use champagne or pink diamonds. You may also seriously consider using lab grown diamonds or synthetic moissanite (not cubic zirconia) in the designs – these are reportedly more brilliant than diamonds, and also extremely cost effective. Besides, availability of synthetic diamonds is independent of factors like supply from mines – so a regular, uninterrupted supply is assured.%% {{2. Inform and prepare the customer:}} No matter what you do, eventually the price rise will show up in the finished product. Rather than shock the customer when she walks in to do her important wedding or festive shopping, a gradual increase in prices, along with information dissemination will go a long way in preparing the customer for a price hike. It is always better to have a steady increase of a few percent at a time over a period of time, rather than a sudden 30-40% rise. The customer needs to be assured that the price rise is due to extenuating circumstances. %% While the situation appears bleak, the good news is that the increase in prices would be absorbed in the increased demand during the festive and wedding seasons. Customers buy jewellery when they have to, despite price increases – we have already seen that happening with gold. Besides, diamonds are also turning into a good investment option like gold. So, maybe, the situation may just about turn out alright in the long term...