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.