Many misinformed sneakerheads may give you the impression that the cost breakdown for a $100 Nike shoe is simple. For example, they&#;ll spout off some uneducated comment like this:
&#;It costs $3 to make a pair of Nikes. They&#;re ripping us off!&#;
The real answer for the cost breakdown of an average shoe is much more complicated. Long time shoe industry insider, Matthew Kish of the Portland Business Journal, provided WearTesters with detailed costing information that gives a better picture of what a shoe typically costs.
As you can see in the graphic, the manufacturer (in this case, Nike) pockets a relatively small portion of the total profit. Retailers (Finish Line, Foot Locker, etc.) get the biggest piece of the pie. Retailers getting 50% of the final retail price is common practice in the footwear industry.
A rule of thumb for athletic apparel and sporting goods companies such as Nike is to give retailers a 50% discount on suggested retail prices. The numbers provided by Matthew Kish line up with that rule. Also, note that not every $100 shoe will sell for full retail price. Often, eventual markdowns can take a chunk out of retailer profits. Or unsold inventory may force the retailer to send the shoes back to Nike (depending on the retailer&#;s agreement).
Retailers taking a big chunk of profits is a big reason why Nike drives more purchases to SNKRS and Nike.com. It makes a huge difference in terms of profit margin. Consequently, it&#;s best for Nike if you buy direct from Nike.
The actual cost breakdown totals $28.50. This means Nike makes a profit of $21.50 on a $100 sneaker. Subsequently, after taxes and administrative expenses (including research and development), true profit is approximately $4.50.
These profit and cost numbers can fluctuate depending on a number of factors. These factors include new supply chain advancements, regulations in industrial countries like China, deals with factories, international tariffs, and the costs of freight/transportation/shipping.
Keep in mind this breakdown isn&#;t accurate for all shoes. High priced sneakers like the Nike Foamposite or Nike Adapt BB will have different cost structures. But with that caveat listed, this breakdown is very good data to reference any time someone tells you that &#;Nike makes shoes for -insert ridiculously low number- dollars.&#;
If you have any details that should be added to the cost breakdown or would like to share information from your time working in the athletic shoe industry, please reach out via Twitter, Instagram, or .
If this is your first time visiting us, WearTesters is primarily a shoe review website.
We publish comprehensive and unbiased footwear, apparel, and sporting goods reviews. Our veteran team of WearTesters uses a detailed review and testing process designed to provide recommendations and insights to help readers determine the best shoes and apparel for them. Our primary goal is to help our readers save time and money while finding the best possible products.
For more information, please visit Gofar.
Many people dream of making their own sneaker or starting their own shoe brand, but they have no idea what it takes to get started. At Shoemakers Academy, we hear these questions very often&#;
How much does it cost to make a sneaker?
How much money do you need to start a shoe business?
How much does it cost to start a shoe company?
How much money do I need if I want a shoe factory to build my dream sneaker?
Your shoe development cost questions are answered here!
Let&#;s review the phases to build a sneaker and what it costs per phase:
Sneaker Design $0 to $
Sneaker Development $ to $
Sneaker Pre-Production Tooling $ to $
Sneaker Production Equipment $20,000 to $50,000
Are you ready to start your own brand-building journey? Do your shoe business dream seems unattainable?
To build a sneaker, you will need a design. How much does it cost to design a sneaker?
If it is your design, then great the answer is $0!
If you need to hire a designer, the cost can run from $500 to $5,000. The cost is dependant upon the experience of your designer and if you need an upper design and an outsole design. Some shoe designers charge a flat fee for an entire shoe, some charge you piece by piece for the outsole and uppers. A great design is critical to your success as a new brand, so take your time and work hard to get this phase right. (Be aware, you may need to pay more if you want to get that Hot Shot Designer with shoemaking experience .)
If you select a shoe last that is &#;off the shelf&#; and available in the factory, the cost will be $0.
If you send the factory a shoe and ask them to create a similar last, the development fee may be $100 to $200. For example, a copy Nike Air Force One last will most likely cost about $200. If you want a full custom last based on a casting of your foot you can expect to pay closer to $750.
Contact us to discuss your requirements of Canvas Sneaker Manufacturers. Our experienced sales team can help you identify the options that best suit your needs.