Question

diamond is just a stone then why it is so costly

Answer 1

because they are harder to come by

Answer 2

"Diamonds are Rare and so are expensive."
This is true to an extent. But in a market where diamonds are available abundantly, why will a layman even think that they're rare in first place? 
Unlike Gold,Platinum & Silver, There's no standard metric set for proving the worth/value of a diamond. Who ever certifies or grades a diamond, Its just a opinion and nothing else. Different assorters will have different opinions. 
Even though Rapaport decides the price list across the world, Diamond merchants follow their own pricing depending on their Brand standards. 

Diamond price does not vary only depending on just the color and carat weight of the diamond. There are lot of factors like CUT, COLOR, CLARITY, CARAT which decides the worth of the diamond. And also more the Carat weight of the Single diamond, better the Clarity, better the CUT, better the Color more is the Value of the diamond.