What does it cost to make a running shoe? You’ve probably heard someone say that footwear brands like Nike, Adidas, and Under Armour are all ripping us off because it costs so little to make their highly-priced sneakers.
That is true – in part. Completing the shoe in a factory is just a tiny fraction of the cost a running a footwear company incurs before taking a shoe to market. There are many more things to consider when determining the real cost to make a running shoe, such as freight costs, customs duties, advertising efforts, the salary of workers, etc. This well-detailed article by SoleReview provides a lot of data and information on the ins and outs of making a profit off a sneaker.
What Does it Cost to Make a Running Shoe?
First, let’s start with adidas – one of the biggest brands to ever exist, especially since the addition of big names like Lionel Messi and Kanye West. Whether in performance or casual footwear, adidas has a huge pop culture presence that you can’t miss.
The photo below lists the brand’s different sneakers with the production cost and the retail price indicated. You look there and probably say to yourself, “That’s unfair! They make $100 of profit for every shoe?” Well, not so fast.
Cost to make a running shoe: adidas
There’s a good explanation for the wide gap. Just look at the graphic below that. In a $100 adidas sneaker, only $21 is used in production. Getting it to the shelves costs around $27. The other $50 is the profit margin that retailers like Foot Locker and Champs take home. After everything is considered and paid for, adidas only makes, on average, $2 from a $100 sneaker. That’s just 5%. That means that adidas only takes 4.2% of a sneaker sold for their profit.
You can check out our list of the Best adidas Running Shoes to see the ones that are worth your money.
Nike is the largest sports brand to have ever existed. Almost everyone has owned a pair of shoes with a Swoosh on them at least once. Runners prefer Nike. Basketball players prefer Nike. There’s no ending to where Nike has gone in the sports world. The most prominent athletes are endorsers of the brand like LeBron James, Kevin Durant, and Giannis Antetokounmpo.
As we discussed above, there are a lot of costs that go into selling a sneaker. But what you might notice is that Nike makes their shoes cheaper than adidas, yet they have the same retail price.
Cost to make a running shoe: Nike
Again, there’s a ton to consider here. One of which is Nike’s endorsements. They are paying all their athletes about $1 billion to wear their gear and footwear, and there are even reports that the kid from Akron, Ohio will eventually receive a billion alone by the time his deal is over.
Nike does have a higher average profit percentage per shoe than the three-striped brand. They clock in at 5.15% per shoe. In context, the Nike LeBron 19 that costs $200 will profit a mere $10.40. The rest goes to other costs like shipping and customs, while most of it goes to the retailer. It’s easy to see why Nike prefers you purchase directly from them.
You’ll want to check our Best Nike Running Shoes list to check for Nike running shoes that best fit your needs and don’t empty your wallet.
What about discounted sneakers and outlets? Do brands still make money off of them?
The short answer is yes. And the reason for that is simple: outlets cost less to run. If you take your time to observe, you’ll notice that outlets have fewer employees and are located in less expensive places. Rarely will you see an outlet in the dead center of the city where all the action happens. It’s usually in an obscure location or a shopping center dedicated to outlets. The profit margin is just about the same, with a lower cost for operations and products.
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This is a GREAT read! However comma it just reassures my anger at paying $190+ for a Jordan retro… meanwhile the cost of say the Nike More Uptempo retro is the same damn price as it was back in ’96!
I totally agree man. It’s common fact that things get cheaper to manufacture as they age. That’s why video game consoles get cheaper as they age. Nightwing made a great point that we have the competition to thank for the kd9 price reduction. Unfortunately there isn’t competition in the retro market. The Reebok question is one and some of the older adidas, but nothing on the level of the jumpman. There’s nothing to drive the prices down, even if production cost goes down.
Knowledge will free your mind (and save your wallet). Thanks
As much as I’m all for consumers being smart about saving and discounts (I do it all the time), I feel we all have to acknowledge where the actual “right”s and “wrong”s are.
It’s *smart* to find the lowest price you can, but it’s not necessarily *wrong* with how high it starts. Absolutely no rule that dictates how much a company is supposed to charge for retail. They’re free to act in in the interest of profit margins and rate of growth*. You’d do it, too, when you’re in a billion-dollar market. People call MJ a sellout but he just jumped at opportunity. It’s a two-way street where the pricing goes with the demand to generate allure and therefore growth and profit. Nike wouldn’t be where it is, if it kept pricing so aggressively low. People being people want to know they bought a premium brand, and by “premium” that could just mean premium pricing. If Nike did an AND1 or Marbury, interest would die fast. Adidas is on the rise but most sheep will still gravitate to Nike/JB just because.
*And I’m gonna be clear I’m saying this only in regards to pricing. Stuff like labor practices is a different point of discussion altogether.
I’m a bit skeptical on the initial breakdown for retailers (Footlocker level, not outlets), though. Something like $6 profit per shoe doesn’t seem sustainable when you account for heavy dead stock — even if that figure could be based on an average sale prices for the year that accounts for discounts. There’s a continuation past that breakdown (not shown on your post; pertains to discount stores/outlets), but it’s pretty confusing. FTL is supposedly buying a $100 product at $66, which contradicts the $50 purchase price. I’m not sure if that’s $50 base purchase +$17 expenses (which could’ve been rounded up instead of $16)….or if we can substitute that in place of the $50 towards net profit (which would be less). Could be that I read it too fast, but it’s not making sense to me.
You’re absolutely right! I’m in the car industry and it works the exact same way there. What I ask for is completely up to me. What you’re willing to pay is completely up to you. Businesses exist to make profit. Smart businesses maximise that profit by playing to the masses in one way or another. Nike is brilliant at marketing to the masses and they maximize on that with the best of them.
2 critical notes.
1. How many shoes are $100 these days? Because some of those costs don’t inflate as the retail prices do, which skews the result.
2. I’m sure this break-down is correct, but it’s back-engineered, this production line didn’t have to be this long, and most retail is taken-over by brands these days, so of that $50/50% there’s still something coming back, which isn’t specified.
It’s a little like playing 3-Card Monte, we’re supposed to follow the lady, but I’m not sure the lady’s actually on the table in these breakdowns.
Thanks for the sharing article. Outlet stores directly from these brands makes sense why they are set up.
Its a bit odd to me that boost costs a little more than zoom. I assumed since zoom had more separate parts that it was more expensive. I’d take boost over most of the zoom they use, though. Boost is usually always full length or close to it, you know it’ll feel great, it absorbs impact better than any cushion, and Nike likes to use puny zoom units that you can barely feel these days. I guess thats why they cost less.
although it is a great read, it is not entirely factual nor accurate. there is a lot more factors involve in this but basically saying that Nike is only making $5 on a $100 running shoe is just as bad as someone trying to pull my leg.