The 4 C'S
A diamond's value is based on four main characteristics known as the "4 C's". Clarity, color and cut (proportion) together with the carat weight determine the value of a stone. While clarity is frequently assumed to be the most important factor of the 4 C’s, in actuality, color and cut (particularly cut) have a more profound effect on the visual appearance of a diamond.
A diamond's size is indicated by its weight, and the weight is indicated in carats: one carat equals 1/5 of a gram. The word carat is often abbreviated as "ct."
If a diamond weighs less than one carat, its weight is indicated in points (1/100 of a carat). Therefore, a half-carat stone weighs 50 points, while a 75 point diamond is 3/4 of a carat. If a diamond weighs more than one carat, its weight is expressed in carats and decimals. Therefore, a 1.07 ct. stone weighs one carat and 7 points. The price of a diamond tends to jump when its carat weight crosses 50 points, 75 points or 1 carat. The price difference between a diamond that weighs 49 points and one that weighs 50 points is often greater than the price difference between one weighing 48 and 49 points.
The larger a diamond, the more rare it is. Therefore, as carat weight increases, so does the price per carat. A 2-ct. stone, for example, will be more than twice that of a 1-ct. stone, assuming they are similar in cut, clarity and color.