Most of us realize that the shoes we buy – whether they are high heels, sports shoes or sandals – come with a hefty markup.  That is to say, the price you pay to own that particular pair of shoes is much, much higher than what it costs Nike to make that pair of shoes.  But exactly how much extra are we paying?

Well, it depends on the brand and the market for the shoes.  Part of the reason designer shoes are so expensive is that very few people can afford to buy them. This of course means that there are significantly fewer sales of designer shoes.  Therefore, each sale needs to rake in that much more dough in order to be profitable and keep the company afloat.  You could say that this is a vicious circle.  Designer shoes are expensive, which means that not very many people can afford them, which means the shoes need to be even more expensive in order to make them profitable.  Yes, and the designer companies like it that way!  (It is important to note that designer shoes are made with higher quality materials and labor than less expensive shoes, so you do get greater quality for your money.  But the relationship between quality and price is exponential.  For a moderate increase in quality, the price skyrockets.)

Another reason shoes are marked up is because of sponsorship.  Nike is a good example of this practice.  Nike pays athletes to market their shoes.  That means, for every pair of Air Jordans that are sold, Michael Jordan receives 5 dollars.  The price of marketing is included when calculating the final cost of the shoe (as are the costs for the designer and other so-called “soft” costs.)  The cheapest Nike may only cost 7 dollars to make, but Nike has to incorporate these other expenses plus profit before it comes out with the price of the shoe that you’ll see on the sales floor.  Many people have criticized Nike for this inflation in prices.  Is it really necessary to pay Tiger Woods $20 million dollars a year to promote Nike when the shoes he is promoting cost 15 dollars to make and the people who make them earn less than 1000 dollars a year?

It is important to clothe your feet in high quality, supportive footwear, and price does indicate quality.  However, price also is largely a factor of branding and sponsorship.  At a certain point, the cost of a shoe is all about glitz, glitter and image.  People hoping to cut costs on shoes, but not sacrifice quality, should look towards brands without a lot of excessive marketing costs