Lab-grown diamonds are becoming increasingly popular among consumers due to their striking similarity to natural diamonds and their relative affordability.

In 2015, lab diamonds accounted for less than 1% of global diamond sales for jewelry. However, today, they make up approximately 20% of the market, according to industry data from Paul Zimnisky Diamond Analytics.

With the growing demand, more producers are entering the lab diamond market, leading to further price drops.

In 2023, loose, lab-grown diamond sales increased by 47% compared to the previous year. During the same period, their average retail prices decreased by 20%, as reported by Tenoris, a jewelry industry analytics company.

The cost savings on lab-grown diamonds are significant compared to naturally forming diamonds.

For instance, a 1-carat princess-cut diamond would cost around $2,500 if it were natural, whereas a lab-grown diamond of the same quality would only cost about $500, according to Mehul Sompora, CEO of Diamond Hedge, a diamond price comparison tool.

Flooding the Market

"Prices of lab-grown diamonds are falling due to simple supply and demand. The market is being flooded with lab-grown diamonds by numerous manufacturers, causing prices to dive," said Sompora to CBS MoneyWatch.

Man-made Diamonds: A More Affordable Option

Man-made diamonds can take as little as a few weeks to produce, versus the billions of years it takes for a diamond to form naturally.

There are two main methods by which diamonds are made in labs. Big factory press-like machines use extremely high pressure and temperatures to press pure carbon, which eventually crystalizes into a diamond.

The other method requires a slice of a real diamond, and uses microwave-like technology to bake and grow the natural diamond's DNA.

As a rule of thumb, man-made diamonds on average sell for about 10% the cost of natural diamonds. A year ago, they cost about 20%-30% of the price, according to Diamond Hedge.

A natural 2-carat, round-cut diamond with a high-quality color and clarity rating costs about $13,000-14,000, whereas the equivalent lab-grown diamond sells for about $1,000, according to Sompora.

Lab techniques allow consumers to purchase bigger rocks, or save money on modest sizes.

"Most people can't afford a two-thousand dollar ring. It makes proposing more affordable for consumers, which is fantastic," Sompora said. Of course "they still have to pay for the wedding," he added.

They also eliminate some of the anxiety around potentially losing a pricey piece of jewelry.

"If you lose it, it's not going to ruin your life," Zimnisky told CBS MoneyWatch.