• Sunay Gandhi

Is Lightbox's 800 Dollar price per carat profitable?

Updated: Oct 21, 2021

Last month, Lightbox, a subsidiary of Debeers, announced the expansion of their product line to include diamonds up to 2 carats in size. At the same time, they are maintaining their retail price point of $ 800 per carat.

The lightbox pricing is a contentious issue in the industry, with either people agreeing with the pricing strategy or accusing them of dumping merchandise to destroy the nascent but fast-growing lab-grown diamond market. However, the fact is that, as of date, the DeBeers retail price of lab-grown diamond prices is lower than B2B wholesale prices in the trading centers like Mumbai, Antwerp, or New York.

Are they dumping merchandise in the market?

Debeers has always maintained that Lightbox is a serious business, and they are profitable at the current prices. In my opinion, I tend to believe them in this case. They have invested 94 million dollars in the factory in Oregon and are forming partnerships with retailers such as the Blue Nile. If they intended to dump merchandise in the market, there are far more efficient ways of doing so. Why go through the hoops of creating a brand when you can produce and sell the rough at a low price.

Lightbox's new plant in Oregon

What is the cost per carat for them?

Diamond is made up almost entirely of carbon. Carbon is one of the most common elements found on earth. Graphite, the other crystalline form of carbon, costs approximately around $ 1000 per metric tonne. The purest of which is about $ 20000 per metric tonne or about $ 0.004 per carat.

So what makes a material that costs less than a cent in one form go being hundreds of dollars per carat in rough form in another. The energy required? On average, a CVD machine consumes about 100 kWh per carat of diamond produced. Based on average US energy rate comes to about $ 10 per carat on the higher end.

Human resources, growing diamond is not a labor-intensive process. The machines are running unattended for most parts, while it is hard to calculate numbers. In my opinion, the cost should not be more than a few dollars per carat. So let's generously assume it to be around $2 per carat.

rows of cvd machines
Inside of lightbox's new plant in Oregon

The only other remaining factor in this calculation is capital cost. We know that DeBeers is investing $ 94 million for a plant that will make about 500000 carats of rough per year. So again, if amortized at 6% APR over ten year period, that comes to about 12.5 million in annual amortization costs or about $25 per carat produced.

Adding up all the costs of growing the stones, we get to a total of $ 37.004 per carat of rough produced. To err on the side of caution, let's round it up to $ 40 per carat.

Converting the rough to polished would cost additional labor, about $ 40 per carat on the higher end. Which at 40% overall yield would give us polished goods at $200 per carat.

cvd rough being polished on a scaif
Polishing CVD rough

Lab-grown diamonds are not different from any other manufactured product. Once growers overcome specific chamber size and power limitations, nothing stops them from growing on a substrate 1mm thick is no different from one of 20mm. It's just a matter of feeding gases into the chamber longer. This ability to grow increasingly bigger sizes means that the cost of growing stones per carat remains constant irrespective of the size of the stone.

Hence, it seems entirely plausible that $ 800 per carat retail, DeBeers is making a decent enough margin mainly because they are genuinely going from the mines (lab) to market with the product.

Time for a bit of self-promotion, We at believe in giving our customers the right product at the right price. Hence, we do not actively market categories of lab-grown diamonds which we believe are overvalued. In cases that we do, for transparency, we do so with full disclosure of our viewpoint.

PS: I would love to hear your thoughts on this topic; please do comment below or email me at

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