[Jewelry making - Article 01102] - Re: [Orchid] Gemstone rarity and price

[Dale Burnett]

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    Dear Steve, Supply (rarity) does not determine demand.  That is not
    how the supply/demand equation works.  Supply in combination with
    demand determines price.  That is why, as you noted, that a very
    rare, beautiful gem will not sell for a "million bucks" if nobody
    wants it.  There is no demand.  Hence, a low price.  Conversely, an
    item with a plentiful supply can still command a high price if there
    is sufficient demand.  One caveat here is that the supply can be the
    "perceived" supply.  An item need not necessarily actually be rare,
    but if the demand is high and everyone thinks it is rare, then it
    will command a higher price. 

    Demand, on the other hand, is driven by many things.  As Richard
    points out, marketing is one of the factors that can drive demand. 
    A good marketing campaign can create great demand out of thin air. 
    Pet rocks were a good example of this.  It's relatively easy to
    determine supply, but if one could accurately predict what will be
    in demand tomorrow, you would be very wealthy.  Indeed, some people
    make their living this way (Faith Popcorn is a good example). 

    The laws of supply and demand do still work. 

Regards,
Dale


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