Stamp grades range from “average” all the way to “gem”. Grades are based on three factors: centering, condition, and eye appeal. Centering means determining how well a stamp’s design is centered within its perforations. A well centered stamp has equal sized margins, while a poorly centered stamp has margins of unequal size. Well centered stamps command a higher grade (and price) than poorly centered stamps. If a stamp is in perfect condition, grades are directly proportional to the stamp’s centering. So let’s say you have two stamps, both in perfect condition. The first stamp is well centered, and thus has a high grade, while the second stamp is poorly centered and thus has a low grade. The first stamp could be worth approximately 10-100 times as much as the second stamp because the demand for well centered stamps is so high.
Checkout these references:
Introduction to Grading Stamps