Diamonds are revered for their extreme beauty and everlasting durability.

As an admirer of diamonds for engagement rings, whether past, present or future, one may wonder why there is such variation in price from store to store. What characteristics constitute a $5,000 diamond versus one that costs only $500?

Diamonds are graded based on 4 criteria. The first of these is referred to as the carat, which is a measurement of the weight. The more carats the more expensive a diamond becomes. Size is not the only factor that matters however, remember: it is what is on the inside that counts.

Carat size may push the price up, but only slightly if there is no clarity. Several facets determine clarity on both an internal and external basis. Internal aspects, dubbed inclusions, and external aspects, dubbed blemishes, all contribute to the overall clarity score.

The quantity, type, location, measurement, and tint of its inclusions, or internal facets, as well as its blemishes, or features on the surface, all factor into the clarity. The clarity ranges from the rank of 'pure,' meaning no flaws, to 'heavily included,' meaning that it is seriously damaged.

The appearance or absence of these imperfections is a result of how the diamond was formed underground over thousands of years. Since diamonds are often thought of as the symbol of perfection in our society, the more perfect they actually are under the scrutiny of a microscope, the more expensive they become.

Color is the next element that affects price. Although clarity is important, there are special cases where under certain conditions underground a diamond may have taken on a certain coloration that actually increases its value.

The color of a diamond ranges from "D," which is a complete lack of color, to "Z," which is depicts a very noticable coloration. Diamonds are priced highly if they are deeply colored or are exceptionally clear. Hazy, off-colored diamonds are not considered a favorable item, so they are priced lower.

The cost of a diamond is also determined by one final factor, the cut. The cut of a diamond gives it the ability to glitter by reflecting the light back out in very precise ways.

To view a diamond from the point of view of the cut is to investigate whether or not it has any 'fire'. Like the other criteria for grading, the cut has it's own grading scale that goes from excellent to irregular. If the diamond doesn't knock your socks off then it likely has not been cut very well.

Diamonds are rare, but they are not equally special. Understanding the four important C's of carat, clarity, color and cut that represent the value of a diamond will lead you towards making a better buying decision.