Pearl Pricing: 5 steps to understand how it works

Published On: 
August 26, 2022
pearl pricing tokyo Japan

Pearl Pricing: 5 steps to understand how it works

Introduction

If you're looking to purchase pearls, it's important to understand their pricing and how it relates to their quality as well as the current market situation. In this blog post we will go over some basic points that will help you understand how pearls are priced.

Saltwater pearls vs Freshwater Pearl Pricing

There are many types of pearls. The two main types of pearls that are traded are: saltwater and freshwater. The type of pearl is a major determining factor of price, with saltwater pearls costing substantially more than freshwater pearls.

Because saltwater pearls are considered to be gem-quality, their cost can be worth in dollars could be worth anywhere from $100 to the thousands (per pearl)*. 

Freshwater pearls, on the other hand, tend to be less expensive. They tend to cost anywhere from $5-$500 depending on various factors. 

  • Disclaimer: These prices indicated are only to give our readers a very rough range. They are by no means accurate or account for each possible pearl.

Saltwater pearls

Pearl pricing is also determined by the type of pearl within a category. Let us review saltwater pearls. The most expensive type of pearl is the South Sea Pearl. These pearls are created by a species called Pinctada Maxima. The waters around Australia, Indonesia and the Philippines are home to these oysters, which create South Sea Pearls that have a White or Gold color depending on the lip of the oyster.

The second most expensive pearl is the Tahitian Black Pearl, also known as “Black Tahitians” or “Black Pearls” (though they're not actually black). These oysters are mostly cultured in the waters of French Polynesia.

Finally, we come back around full circle with our old friend: Japanese Akoya pearls! These are the first pearls to have been commercially cultured. When they were the only type of pearls, their prices were very high. However, with the entry of Chinese freshwater pearls to the market their prices experienced a drop. That being said, nowadays, they are climbing back due to supply issues and increased demand. 

Pearl quality (the 5xS grading system)

Pearl quality is another key factor in pearl pricing.

The 5xS grading system rates pearls on five criteria and helps indicating their value by helping us position each pearl on the scale of each factor, as well as the total balance. To read more about the 5xS grading system click this link

  • Pearl Shine
  • Pearl Shape
  • Pearl Size
  • Pearl Shade (color)
  • Pearl Surface

Pearl Value Chain (how close you are to the source)

Most people are surprised to learn that pearls from all over the world are processed in Japan. Even if the pearls originate elsewhere, the Japanese eye and know how is best equipped to process the pearls into strands, pairs and sort through them. The value added in this process is substantial due to the fact that at the end of it lay the highest quality pearls in the world. 

This is a main reason for why Japan is still the best place to buy pearls. All pearl professionals know this, and try to source directly from Japan. That is why we are located in Tokyo, for over 50 years. It is to allow us firsthand access to the pearl farms, proxies and processing companies that are the best of the best. Our longstanding industry ties allow us to source pearls at ideal timing, and a wide range of them at that. 

The close proximity to the source of the pearl trade gives you better value when purchasing pearls due to the fact that the pearls are processed by less hands on the way. This simple concept is often overlooked by people wanting to understand pearl pricing.

black pearl prices
Pearl technitian extracting a pearl in a pearl farm in. French Polynesia

Market Conditions (Supply and demand)

Market supply and demand are the main factors that affect pearl pricing. Many people have a difficult time understanding how these two factors work together to form a price, but they really aren't as complicated as they seem.

Supply is how many pearls are available in a given market at any given time. It's important to note that not all pearls are created equal; some pearls may be worth more than others due to their quality or rarity. If there are more high-quality, rare pearls available on the market than there is demand for them, then their prices will decrease accordingly because they won't sell very quickly (or at all). On the other hand, if there are fewer high-quality or rare pearls available on the market than there is demand for them, then their prices will increase because people want those specific types of gems over others (i.e., if someone wants an expensive diamond engagement ring).

As pearls are an organic gemstone, supply is very much affected by factors such as global warming. The increase in water temperature harms the nacres quality, reducing the supply of high quality pearls. In turn, this leads to a price increase. Another example is that Japanese Akoya oysters have suffered from a mysterious plague that reduced their population by 2 million! This had a devastating effect on the supply chain. Covid-19 also harmed supply due to staff being recalled home for quarantine, and closed borders in Asia.

Demand on the other hand is affected by fashion and trends. Often we see when a well known figure wears pearls, the demand goes up. Another time is when one of the major jewelry brands makes a marketing push for pearls, the demand goes up as well. In any case, pearls have been cherished from the beginning of time. Demand may peak, but it never disappears.

Conclusion

Pearl pricing is not an accurate science. The grading is subjective and the market conditions is in constant flux. This makes gaging the price of pearls very challenging. Even professionals have a hard time to grasp the changes. But hopefully this guide has given you a good starting point for understanding pearl pricing and how it works.

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