SNEAKER ECONOMICS 101
From production costs to retail pricing and the secondary market, the breakdown of a sneaker’s price involves multiple factors. How much are sneaker brands paying to produce a sneaker? What determines the retail price for a particular SKU? And how are sneakers sometimes sold for three times their retail value? In this blog, we’ll explore the lifecycle of sneaker pricing and answer these key questions.
HOW MUCH ARE BRANDS PAYING?
Let’s start with one of the world’s biggest sneaker producers—Nike. A sneaker that retails for $100 USD is estimated to cost only $22 USD to produce. At its core, a sneaker is made up of materials that are cut, glued, and stitched into a final silhouette. The cost of materials accounts for the largest part of production expenses. Thanks to bulk purchasing for mass production, brands can negotiate lower material costs.
Labour costs remain low for brands that outsource manufacturing to offshore factories. In Nike’s case, production happens in countries like Vietnam, China, and India, where labour costs are cheaper. Once produced, the sneaker needs to be shipped, adding approximately $5 USD in shipping fees to the production cost.
For that $100 USD retail price, Nike's actual profit is around $5 USD. The rest covers production, shipping (including insurance and customs), marketing, overheads, taxes, and the retailer's margin. Retail prices must strike a balance—high enough to cover costs and ensure profitability but not so high that they scare off consumers. Rising material costs, marketing, labour, and overheads mean that retail prices increase as well, a reality for all brands.
RETAIL
Retail pricing can also be influenced by several other factors, such as brand collaborations and exclusivity.
EXCLUSIVITY
Take the New Balance x Loro Piana 990v6 collaboration, which has a retail price of $1,500 USD, a steep figure for a sneaker. This price point reflects the luxury attached to the Loro Piana brand, known for its high-end Italian craftsmanship and premium materials. Limited production runs drive up exclusivity, allowing brands to set higher prices knowing their target audience is willing to pay.
This isn’t the first time the sneaker industry has seen such a price point. The Dior x Air Jordan collaboration on the Jordan 1 retailed for $2,000 USD. The premium pricing was due to the Dior name, higher-quality materials, and the exclusivity of only 13,000 pairs produced, 5,000 of which were reserved for Dior's top clients. The remaining 8,000 were sold through a lottery, adding to the scarcity and driving up demand.
Collaborations like these are becoming increasingly common in the sneaker world and contribute to fluctuating retail prices.
COLLABS
What differentiates two similar sneakers? Branding. Consider the COMME des GARÇONS HOMME x New Balance collaboration, which retailed for $308 USD, compared to a similar general release New Balance priced at $155 USD. The shoes are practically identical, except for the branding.
Collaborations bring a higher price tag because the partnering brand’s value is attached to the product. For example, the JJJJound ASICS Gel-Kayano 14 Silver White retailed for $180 USD, while the standard ASICS Gel-Kayano 14 in a similar colourway sold for $150 USD. The only significant difference? The JJJJound logo.
In my opinion, there’s nothing particularly special about the JJJJound colourway—ASICS could have easily released it themselves. If I saw someone wearing them on the street, I wouldn’t be able to tell they were a collaboration pair. However, because of the collaboration, the price increased by $30 USD.
Collaborations also introduce additional costs. More meetings, designer input, material selection, packaging, marketing, and campaign planning all increase overheads. These higher expenses are passed on to consumers through elevated retail prices.
MADE IN…
Most general releases (GRs) are produced in offshore factories with minimal labour costs, though there is often an associated ethical cost. However, some brands, particularly those based in the US or Europe, occasionally manufacture onshore to stay true to their heritage.
Take New Balance, for example. The company has its "MADE in UK" and "MADE in USA" lines, which feature specific silhouettes constructed with higher quality materials and ethical labour practices. These onshore productions lead to higher retail prices compared to offshore-made sneakers, but many consumers are willing to pay for the added quality and ethical considerations.
RESALE
Once a sneaker hits the retail market, its journey is far from over. The resale market is where things can get unpredictable, with some sneakers fetching prices multiple times higher than their original retail value. This phenomenon is driven by several key factors: supply and demand, brand reputation, collaborations, and cultural significance.
Limited releases, exclusive collaborations, and brand-driven hype play a huge role in driving resale prices upward. When demand outstrips supply, resellers take advantage of the scarcity, pricing sneakers well above retail. For example, the Dior x Air Jordan 1, which retailed for $2,000 USD, can easily be resold for over $10,000 USD due to its limited availability and the combined brand power of Dior and Jordan.
Platforms like StockX, GOAT, and eBay have streamlined the resale process, allowing buyers and sellers to trade sneakers like stocks. These platforms track price fluctuations, offering real-time market data and authentication services to ensure buyers are getting legitimate products. In this sense, sneakers have almost become commodities, with their value fluctuating based on market trends and consumer interest.
However, resale prices aren’t just a result of limited supply. Cultural moments and celebrity endorsements can also dramatically increase demand for certain models. When a high-profile figure like Kanye West is seen wearing a particular pair, or a sneaker is featured prominently in pop culture, its resale price can skyrocket overnight.
The resale market is volatile - prices can rise or fall based on brand moves, economic conditions, or even new releases. Some sneakers, like the iconic Air Jordans or Yeezys, have become so ingrained in sneaker culture that they hold value long-term. Others may see a quick spike in demand but eventually settle back down as trends shift.
For those invested in sneaker culture, understanding the economics behind retail and resale pricing is key to navigating this world, whether as a buyer, collector, or reseller.
CONCLUSION
The journey of a sneaker from production to retail and ultimately to the resale market is a complex process driven by a mix of economics, culture, and consumer behaviour. From the relatively low production costs to the strategic pricing influenced by collaborations, exclusivity, and brand value, every step adds layers to a sneaker’s final price.
The resale market amplifies this dynamic, turning sneakers into valuable commodities whose worth can far exceed retail prices, driven by scarcity, demand, and cultural relevance. Whether you’re a casual buyer or a seasoned collector, understanding the economics behind sneakers offers valuable insight into why your favourite pair might cost what it does—and why it’s likely to become even more valuable over time.
In the end, sneakers are more than just shoes—they're a reflection of culture, trends, and the forces of supply and demand.
