This is the easiest factor to understand, although there is a little wrinkle here too! Carat is a measure of weight: 5 carats = 1 gram, 1carat = 0.20 gram.

Carat weight is stated decimal terms, such that one carat is written 1.00ct. One and a half carat = 1.50ct, three quarters of a carat = 0.75ct and so on.

Diamonds under one carat are commonly talked about in terms of "points" which are simply percentage points of a carat (1.00ct= 100 points). So a quarter of a carat (0.25ct) is said to be 25 points, half carat is 50 points, 0.98ct is 98 points and so on. Because a carat is a unit of weight, diamonds of exactly the same carat weight can appear to be different sizes, depending on the proportions of the cut. A thicker or deeper cut will look smaller than a stone with a larger surface area or "spread".

The illustration below shows relative visual sizes of well cut diamonds in a range of carat weights. (not intended to represent actual sizes)

Rarity and value increase with diamond size- an important concept to appreciate. A 1.00ct diamond of a certain quality is far rarer than the same quality in a 0.50ct diamond. Therefore, the cost of the 1.00 is more than simply twice the cost of the 50 pointer. As a result, the per carat price of like quality diamonds increases with size. In the example above, the 50 pointer might cost $2000/ct -a total of $1000, whereas the 1.00ct diamond in the same quality might cost $3900/ct totalling $3900.

Note: Carat is sometimes confused with Karat (and for good reason!). Whereas carat is a measure of gemstone weight, Karat is a measure of gold purity. 24 Karat is pure gold, 14K is 14/24 pure (58.5%), 18K is 18/24 pure (75%).

Practical advice:

Apparent diamond size varies depending on the carat weight and the proportioning of the cut. A 1.00ct stone that is cut a little too deep might actually be smaller looking than a 0.90ct stone that is well proportioned. Also, at certain carat levels, per carat prices increase substantially. It is sometimes possible to get real price savings by staying just under these so called "magic marks". For instance, a well cut stone of 0.45 ct might be quite a bit less expensive than the same quality 0.50ct, yet have a visual appearance virtually the same. The important magic marks are 0.50ct, 0.70ct, 1.00ct, 1.25ct, 1.50ct, 2.00ct, 3.00ct, 5.00ct.