Not only logo. What do you pay for when buying sneakers?

Is it really true that when buying shoes you pay mostly for the brand? What part of your money goes to the manufacturer’s pocket? Who’s losing the most when you buy your dream shoes on sale? Let’s see what’s behind the shoes price!

“If not for the logo these shoes would probably cost ten times less”

“Why should I pay that much? To line Kanye’s pockets?!”

There’s a lot of myths about shoes prices. It’s no wonder—buying a new pair could cost a pretty penny. Especially if we can’t say no to the latest models of famous brands. How much truth is in all these stories? We’ve decided to check it out. That’s why we investigated the pair of shoes of one of the most famous brands. Retail price—120€. Let’s see what’s behind it!

Manufacturing cheap, selling expensive

Our shoes start the journey in China. That’s where most of shoes are made—Chinese factories produce around 13 mld pairs every year. That’s almost six times more than India, who took the second place.

Shoes manufacturing is a very well-planned puzzle. Although most of its elements are done by machines, part of the work must be done by humans. We’re talking about cutting the uppers, sewing, quality control… If we put all this together, manufacturing and packaging are only one fourth of the final price.

So why are we paying almost four times more at the store?

How much does the manufacturer earn?

The first element that makes our price higher is the transportation from China. It’s necessary to pay for the container, insurance and customs duty. Manufacturer and distributor share the costs, but not evenly. Usually the former pays only for transporting the shoes to the port. Together it costs around 4 euros to transport our shoes from China.

There is more—margins. Around 7% goes to manufacturer, and 45%—retailer.

It looks like the retailer is the biggest winner here, right? However, those 45% are not the pure profit. Margins have to cover the costs of buying the shoes from manufacturer or distributor and other current expenditures. After all, the rent, employees’ salaries and bills aren’t gonna pay itself. So the profit is only a small fraction of that 45%.

The last element is VAT—shoes are charged at the standard, 23% rate.

1.5% for Kanye

The most popular models are often under some famous star’s signature. Big names come with many clients—people like Pharell Williams, LeBron James or Kanye West have their own shoe lines.

If you buy shoes promoted by famous faces (or rather—famous feet), around 1.5% of money you spent goes directly to them—in the form of licence or commission fee.

The secret of sale prices

The calculation above could suggest that by buying our dream shoes on sale we’ll take some of the retailer’s profit. Is it really true though?

It’s hard to answer that question. Stores are setting their prices in such a way so they wouldn’t take a loss. It means at least getting back the money they spend on buying the shoes from manufacturer. Some sale networks in fact reduce their margin to sell more pairs than the competition. The others rely on the individual contracts with distributors and manufacturers. The situation looks quite differently in case of those who sell the cheapest—the outlets. Those are usually in the outskirts of the cities, which means cheaper rent. That’s why they offer more tempting prices.

But even the outlets can’t stand up to the online stores. They don’t have to pay the rent at all. That’s why you’ll find the best prices online. What’s more, you can reduce those prices even more with coupons or special promotions. Now when you know what you really pay for, hunting for occasions will be even more fun!

The information stated above are based on the manufacturers’ reports, international carriers’ offers, data sets found on the professional websites and more. Of course, they’re not a perfect reflection of the reality but only estimation that we used to show the products’ journey to the stores. Not many companies share the details of manufacturing and distribution of their products. By taking a closer look at their prices we want to encourage discussion and above all—conscious shopping!

About VAT: this tax is charged on the net price, which means net price = 100%, gross price = 123% (100% + VAT 23%). Consequently, VAT makes approximately 19% of the gross price.

If you are looking for a new pair of kicks, consider checking stores such as Footasylum, Converse and Nike, where you can save money thanks to Picodi. Our cashback can be combined with discount codes, easily doubling your savings!

Check what you pay for

Take a look at our Real Price of Goods series and find out what’s the price of: