Let’s start with the basics, a diamond’s clarity refers to the inclusions or imperfections found within the diamond. These so-called “flaws” that can be everything from minerals trapped in the diamond to cracks and blemishes. Whatever type of flaws a diamond has, they are natural inclusions that have been part of the diamond since its formation.  The size and placement of these inclusions determines its clarity grade.  It is this clarity scale that can significantly impact a diamond’s value and price. Here is the clarity grade spectrum according to GIA:

 

VS1, VS2, and SI1 are the sweet spots

Now, for the practicality of it all. Just like color, there is a sweet spot along the clarity scale where the diamonds are considered “eye clean” without breaking the bank. These grades are VS1, VS2, and SI1. These diamonds offer more bang for your buck over higher clarity grades.  You get to put more money towards the carat weight, color, and clarity you want. But, these savings come with a little more homework.  You have to watch out for the bad ones.  Even among the same clarity grades not all have the same value. There are certain types of inclusions and their location in the diamond that are more desirable than others.  For example, an SI2 made up of inclusions that comprise of black crystals positioned across the table; or center of the diamond would be more obvious to the naked eye and therefore less valuable than transparent inclusions. Take a look at the two diamond images below, both of them are graded SI2 clarity by GIA, and yet the diamond on the left is more pleasant and considered a more desirable SI2 then the diamond `on the right:

As you go higher in clarity scale, the disparity among the same grades become less obvious, but they're still there and continue to affect the price to some extent. The next pair of diamonds below are graded SI1 by GIA. As you can see, the left diamond although clear across the center, does have obvious inclusions along the side, whereas the diamond on the right has a small thin feather which will be harder to detect with the naked eye.

VS2 would be the last grade where the disparity has any significant impact on price. Below are two diamonds graded VS2 by GIA. The VS2 diamond on the left has tiny crystals that would be eye clean to most, but detectable under 10X magnification. Whereas, the VS2 diamond on the right also has tiny crystals with white inclusions so it makes the diamond appear 100% eye clean and it would even be hard to detect any imperfections under 10X to the untrained eye.

VVS’s & Flawless

Once you reach VVS2 clarity you're basically comparing clean verses "microscopically" cleaner diamonds.  Meaning unless you have superman vision (or using a 30X loop), you'll be hard pressed to find any imperfection.  Some diamond dealers claim that it is diminishing returns to aim for the highest clarity because you can't appreciate what the extra money you’re spending on them is getting you. Yet others say, it is the “purest of hearts that go for clarity,” suggesting that they’re not buying a diamond for show, they’re buying it for themselves and they just want the highest quality for their lover.  Whatever your heart desires, there is nothing inherently wrong with either point of view.

Lookout for the deals

If you're really in a bind about this decision, you may be able to get the best of both worlds. Another interesting point to note is that while the base price for higher clarity grades is higher, sometimes the trading discount is deeper. I found a 1.03 carat round diamond, I color, VS1 clarity, with excellent cut, excellent polish, and excellent symmetry (no fluorescence) for $6,728, while they were also selling a 1.07 round diamond, I color, VVS2 clarity, with excellent cut, excellent polish, and excellent symmetry (no fluorescence) for $6,235. In these scenarios, you might be able to nab a higher clarity grade like a VVS2, VVS1, or even a IF (internally flawless) for just a little more or less than VS1 or VS2.  This is because often times a manufacturer buys a rough diamond with the speculation that the diamond will yield a VS diamond, but ends up with a better turnout and gets a VVS grade. In this case the dealer may decide to simply lower the discount on the VVS to compete with some of the VS’s on the market.

One diamond dealer I interviewed mentioned, “if I have a cushion diamond, 1.20 carat E color, VVS2 clarity in stock and my customer is looking for a 1.20 F-E, SI1 or VS2, I may just lower the price on my diamond to make it fit in my customer’s budget even though it is better specs than what he was looking for because I would rather sell my stone over buying another one from the market”. Although this dealer has an agenda to sell his own stock, in this case, his agenda works for you and I would consider taking him up on his offer.  Just make sure all other factors are equal. In most cases the diamond with superior grades should be priced higher and if its not its probably because you’ve missed something!

Use a loop

If you're shopping for an engagement ring or loose diamond and you’re able to see it in person, don’t be afraid to ask for a loop (magnification tool) and take the time to look for the inclusions.  If the inclusions appear to be gentle under 2X or 10X and you can not detect them without magnification, it is probably a good contender.  But, if you’re having trouble, you can also look at the certificate’s diagram: