Those that are misinformed might give you the impression that the cost breakdown for a $100 Nike sneaker is simple:
“It costs $3 to make a pair of Nikes. They’re ripping us off!”
The true answer (at least for an average shoe cost breakdown) is actually told by Matthew Kish of the Portland Business Journal as seen by the info below:
As you can see, the manufacturer (in this case; Nike) pockets very little of the total profits that can be had. The retailers (i.e. Finish Line, Foot Locker, etc.) get the biggest piece of the pie, which is common for most of the footwear industry. A rule of thumb for companies like Nike is to give 50% discounts to retailers from suggested retail prices, so these numbers are well in line with that. Also take note that not every $100 shoe will sell and eventual markdowns can take a bite out of retailer profits (or force the retailer to send shoes back to Nike.)
The actual cost breakdown totals $28.50, meaning Nike makes profits of $21.50 on a $100 sneaker. After taxes and administrative expenses (including research and development,) true profits are around $4.50. These numbers can fluctuate in the future, depending on a number of factors including; new supply chain advancements, regulations in industrial/factory countries like China, as well as the increasing costs of freight/transportation.
This breakdown isn’t priced for all shoes, particularly high cost sneakers like the Foamposite. With that said, the breakdown is great info for any time you hear someone say “Nike makes shoes for -ridiculously low number- dollars.“