The 4Cs are the main parameters for valuating a diamond’s cost. They include weight in Carat, Color, Clarity and Cut.
Usually, an untrained person might be able to differentiate two of the four parameters: weight and color. The other two parameters, clarity and cut, are more complex and require expertise.
Carat is the weight unit used for all gemstones. One carat is equal to 0.2 grams and is divided into 100 points, where one carat equals 100 points. Each point weighs two milligrams.
The origin of the word carat is in the seeds of the carob tree, which were used for the weighing of precious stones in ancient times due to their weight uniformity. A diamond carat is a measurement of its weight not its size, and is not to be confused with Karat, used for determining the purity of gold.
Sometimes, a diamond cutter must sacrifice the proportions or symmetry of the stone, in order to prevent visible inclusions or to maintain the carat weight of the rough diamond. By compromising cut proportions and/or symmetry, the diamond’s diameter can be larger, and thus a diamond’s cut can make it appear much larger or smaller than its actual weight.
The price per carat of a stone is significantly higher when it weighs over one carat. For that reason, one carat diamonds tend to be the result of sacrificing cut quality in order to increase carat weight.
Jewelers sometimes advise customers to buy a 0.99 carat diamond in order to achieve the lower price, and a 1.10 carat diamond when there is a preference for higher quality cut. In weighing jewelry inlaid with more than one stone, the total weight of diamonds (or gemstones) is called Total Carat Weight (T.W.C).
The visible size of a diamond is called Spread. Spread is the ratio between the stone’s diameter and the crown, girdle and pavilion. In an ideal cut diamond, the stone will have zero spread penalties.
The Federal Trade Commission Jewelry Guide specifies: "If the diamond's weight is described in decimal parts of a carat, the figure should be accurate to the last decimal place." Therefore, a diamond of 0.10 carat might be of a weight between 0.095 and 0.104 carat.
Price per carat:
Prices per carat do not follow the logic of: “1/2 a carat costs half the price of a carat”. Since it is rarer to find a naturally large diamond, the price of one carat is much higher than that of 1/2 a carat.
One carat (again, not to be confused with Karat—the measure of purity of gold) is the equivalent of 200 milligrams. One carat can also be divided into 100 "points." A .75 carat diamond is the same as a 75-points or a 3/4 carat diamond.
The Hancock Diamond, weighing less than one carat, famously sold for $880,000 at Southeby's in 1987, due to its very rare red color.
Read more about diamonds and about the 4Cs.