Article: This Is How Much It Costs NIKE To Make a $100 Pair of Sneakers

I saw this on the Houston Chronicle's website and decided to share it.  The shoes in the slideshow are outdated.  And with many shoes having an MSRP of $200 now, I guess you could just double the cost of goods sold.  

http://www.chron.com/business/artic...e-to-make-a-pair-of-5964040.php#photo-7284163

In order for companies to make a profit, they must pass the cost of production on to you, the consumer. On top of that, they must also charge a bunch of other fees that give them amazing returns. Here's what Nike pays to make a pair of $100 sneakers...and what you ultimately pay.

It’s no surprise that companies charge more for their product than what they actually paid to make it, that’s the nature of business. But, some companies are winning way more than consumers may realize (or maybe even care).

Case and point: the most dominant athletic apparel company in the world, Nike. People pay upwards of $100 for Nike sneakers without a second thought. As the consumer, it’s their right to pay as much or as little as they want for whatever they choose. But on average, it only costs the company about $30 to make those shoes. This doesn’t include the cost to make Air Jordans or the exorbitant amount of money “sneaker heads” will pay for them (and wait in line for hours to do so).

A recent article in Portland Business Journal  breaks down the cost of how much it costs Nike to make a $100 shoe. The figures are not specific to one shoe, the numbers are a reflection of “general industry framework.”

Take a look at the cost breakdown.

Man who gives a **** this goes for a lot of consumer goods

Nothing new

So, just to clarify, you're saying that the mass production of consumer goods, which has existed since the Indutrial Revolution, is not new?  The profundity of your insight is exceeded only by its relevance.  

I'm guessing there are a lot of younger NT members who might be interested in learning about the economics behind shoe collecting.  

cwk1 said:

I saw this on the Houston Chronicle's website and decided to share it.  The shoes in the slideshow are outdated.  And with many shoes having an MSRP of $200 now, I guess you could just double the cost of goods sold.  

http://www.chron.com/business/artic...e-to-make-a-pair-of-5964040.php#photo-7284163



 



In order for companies to make a profit, they must pass the cost of production on to you, the consumer. On top of that, they must also charge a bunch of other fees that give them amazing returns. Here's what Nike pays to make a pair of $100 sneakers...and what you ultimately pay.













It’s no surprise that companies charge more for their product than what they actually paid to make it, that’s the nature of business. But, some companies are winning way more than consumers may realize (or maybe even care).



Case and point: the most dominant athletic apparel company in the world, Nike. People pay upwards of $100 for Nike sneakers without a second thought. As the consumer, it’s their right to pay as much or as little as they want for whatever they choose. But on average, it only costs the company about $30 to make those shoes. This doesn’t include the cost to make Air Jordans or the exorbitant amount of money “sneaker heads” will pay for them (and wait in line for hours to do so).



A recent article in Portland Business Journal
 breaks down the cost of how much it costs Nike to make a $100 shoe. The figures are not specific to one shoe, the numbers are a reflection of “general industry framework.”



Take a look at the cost breakdown.

Click to expand...

the cost of nike to manufacture and place on consumer shelves has been common knowledge for a while. what was really a mystery, was how much the middle men (footlockers etc) pay for the shoes. that question was kind of answered during the last robbery of the lebron 12 in memphis.

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Good point.  Retail vendors pay 50% of MSRP, so $50 for a $100 shoe.  What they CHOOSE to sell it for is another story.  Large chains such as Footlocker are legally obligated to charge MSRP or less.  They won't jeapordize their account status by attempting to price gouge.  Boutique shops can set their own prices based on supply and demand.  

cwk1 said:

/\/\/\/\/\
Good point.  Retail vendors pay 50% of MSRP, so $50 for a $100 shoe.  What they CHOOSE to sell it for is another story.  Large chains such as Footlocker are legally obligated to charge MSRP or less.  They won't jeapordize their account status by attempting to price gouge.  Boutique shops can set their own prices based on supply and demand.  

Click to expand...

In most cases it's half off MSRP, but depending on how large the account is - there are volume discounts. As rawdawg pointed out, the LBJs that were hijacked cost the (large volume retailer) $83 or $86 (can't remember correctly) per unit. That's a fantastic profit margin considering the MSRP is $200.

cwk1 said:

/\/\/\/\/\
Good point.  Retail vendors pay 50% of MSRP, so $50 for a $100 shoe.  What they CHOOSE to sell it for is another story.  Large chains such as Footlocker are legally obligated to charge MSRP or less.  They won't jeapordize their account status by attempting to price gouge.  Boutique shops can set their own prices based on supply and demand.  

Click to expand...

vood99 said:

In most cases it's half off MSRP, but depending on how large the account is - there are volume discounts. As rawdawg pointed out, the LBJs that were hijacked cost the (large volume retailer) $83 or $86 (can't remember correctly) per unit. That's a fantastic profit margin considering the MSRP is $200.

Click to expand...

seems like nike has decided to stop playing the limited game for now (at least with lebrons/kobes/kds) and retailers are starting to wise up and come off that msrp a little bit as well. all good news for the consumer