RUBY Grades:
A deep red, Ruby's are often associated with a July birthstone and 40th milestone.
The value of a Ruby is determined by color and clarity being the two prime quality factors, with colour the most critical. Hue, tone, saturation and inclusions adding the final value.
The best quality Ruby's are mined in India, Thailand and Australia

As with any precious stone, the expense of a ruby is determined by the cut within the rough mined chunks of all sizes. To cut the best possible quality single ruby, the wastage can be 80%. While medium quality may produce several ruby's and normal everyday rubies by the dozens from that same piece of raw ruby.
All naturally mined precious stones contain inclusions (slight imperfections) Like any other precious stone a ruby's value depends how visible the inclusion and its type. Obviously visible ones, or inclusions that reduce transparency or brightness, lower the value dramatically.
A quality Ruby has a nice woven silk inclusions inside and should be visible on close inspection, or fine thin needles (see picture) or even sometimes looking like a fingerprint. The fine internal light refractions this creates within the ruby can greatly enhance the ruby's radiance and appearance.

Most Rubies are heat treated to improve their clarity and color and this also reduces inclusions to make them look a higher quality.
However, nothing beats a natural untreated ruby of already high quality.

Man made rubies are becoming increasingly popular even in expensive jewellery. Just like Diamonds, they can be grown from a seed and apart from the logistics and environmental impact of earth mined rubies, a lab grown ruby has the best balance of clarity, colour and hue making it equal visually to the highest quality mined ruby.
Grades:
While there is no official grading system, most dealers use the 'A' scale for precious rubies.