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Cost Breakdown of a $100 Nike Shoe

Cost Breakdown Nike

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.

Where Does the Money Go?

Cost Breakdown For A $100 Nike Sneaker Pie Chart
Pie chart via Sole Collector

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.

Cost Breakdown for a $100 Nike Shoe

Cost Breakdown For A $100 Nike Sneaker

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 email.

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17 comments
  1. What about buying directly from Nike? I mean, obviously if they priced the shoes lower than the retailers, the retailers would never sell anything, and people buy them for the retail prices, so they just get a larger cut when they sell directly? Like say from Nike.com?

    1. there are costs to that and of course, to actually selling retail for your own brand etc. of course they still profit more when you buy from nike. but not all nike’s are owned by nike as well. they are like mcdonalds franchises. nike stadium is owned by another entity, nike park as well. they are actually direct competitors. they consider other nike stores competitors. so you could consider that owner of that nike retail store would have the would be 50 of the other retailers.

    2. And no retailer would buy from Nike because they would be undercutting the retailers profit. The very entity that makes Nike billions. No company near Nike size would ever do that.

  2. What’s your point? To the average consumer—-What do they care from whom the actual PROFIT OR MARKUP comes from. All this is saying is, blame the retailers for bilking kids and adults (unfortunately) out of their money. Actually, it’s really supply and demand. They would charge $100,000 for a shoe if there was demand for it. Don’t buy it and retails will mark shoes down. I’m sure Nike is also fudging those numbers slightly and they are still making billions. That small sliver share is billions a year in profit and it’s ALL going to NIKE. All other mark ups are not profit only and split amongst thousands upon thousands of reatailers. Misleading and still tremendous profiteering. Sneakers are not needed for survival. Too bad.

    1. The article was meant to inform, not to assign “blame” on who is getting ripped off. Many times I’ve heard people say “you know it costs __ to make that Nike shoe” so this is all good information for such conversations.

    2. they are articles not to blame but to inform. not all blogs articles/news articles nitpick. it’s business and if you want to run one yourself you could learn from it. its really great actually just actually know about them because we can learn from it and apply it with our own ventures. 2x markups are common with retail. we have to understand having a business also means exploiting some factors to create markups and profit. profit is not bad. profit is the main point of business. unless you are running an non profit organization. still non profit organizations still have an agenda right. to serve whatever a goal they have. i’m not saying you dont have a point. with what you say after you said what’s your point to the article. you actually have but a lot of people also don’t share the same idea so we cant just say dont buy and they will hit markdowns. if we do that, we wont have anything to buy. and i know sneakers are not needed for survival, but they are needed for something which is why they have a market and they have this business. its not like they said you really need this. which is why it is really up to the consumer if they want it or not. and more often than not, they would like to have them. nike is not a charity or mainly a research company to fulfill our sports glory. i come from a research and financial background. i would say if i would be able to create a company i would base it from this model.

  3. This is true, for example, maybe the KD 7 costs 5 dollars to make, but they need to cover other things like marketing, usa

  4. Actually quite common, its always the middle man who drives up the prices because all he can do is ask extra money. Nike can find ways to cut on their costs to produce, but a retailer who sells the shoes can only hope Nike will ask less. Then again retailers are simply doubling the price so they seem to make major profits. It’d be interesting to see what the costs are for the retailer and how much profit they actually make.

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