Why are Nike shoes so expensive?

Nike is one of the world’s most recognised brands and has been synonymous with premium athletic footwear for decades.

Still, everyone wonders why Nike shoes arrive with such a hefty price tag. The answer lies in an array of things. From its brand positioning to research and development, even marketing.

Let’s explain in detail what makes the shoe brand and expensive buy for the consumer.

The company has existed only for about half a century, but from 1964 when it started, Nike has consistently developed the strong brand image that is synonymous with quality, performance, and innovation. Its track record will always warrant premium pricing over its products. Because people always tend to get better value for their money with higher prices, and the brand knows this consumer expectation well.

In addition, Nike has played great deal in promoting sports culture with lots of superstars who endorse it. When customers buy Nike shoes, they are not only buying footwear; they are subscribing to a lifestyle, an identity, and a perception that can associate one with an exclusive group of athletes and opinion leaders. This aspirational marketing drives the brand’s capability to charge customers more.

Nike is one of the global leaders investing heavily in R&D to innovate and enhance footwear technology. It spends millions of dollars every year for the development of new materials, to enhance shoe performance and comfort. For example,

Air, Flyknit, and React foam technologies are examples of innovative technologies advanced in the footwear industry.

These innovations often carry a cost premium over and above production cost, which is then passed on in retail. In addition to that, Nike works with professional athletes to perfect and try their products. Data from these partnerships is used in the process of designing, such that shoes not only look good but also perform great in athletic settings. Their commitment to R&D is a critical determinant of the overall cost of their shoes.

Materials will amount to most of the cost of Nike shoes. Nike wants top-class materials for strength, comfort, and quality performance. For instance, shoes made from high-grade leather, breathable mesh, and advanced synthetic materials form a foundation of most Nike footwear. High-grade varieties are much more expensive than low-grade varieties, and this cost is passed on to consumers.

In addition, Nike uses a great amount of environmentally friendly materials and sustainable procedures in its manufacturing processes. However, the same commitment to sustainability tends to push up the cost of production. An environment-conscious consumer will happily pay extra for value-alignment in shoes, but this can increase the cost of Nike shoes, too.

Nike outsources its manufacturing in countries where labour costs are comparatively cheaper, such as Vietnam, Indonesia, and China. However, such manufacturing processes may also have other associated costs based on their complexity. For Nike shoes, the three principal production processes include design, prototyping, manufacturing, and quality control, and each of them carries a cost that is contributed to the final product. In addition, the company demands strict quality control measures such that the final products that end up in the market are of high quality, hence adding higher costs as well.

Nike is always known for aggressive marketing and advertizing campaigns. This brand spends a lot of money on celebrity endorsement, high-profile collaborations, and novelty advertising strategies. From iconic commercials to deal sponsorships with top sports teams, Nike’s marketing efforts are all set to create the buzz and build brand loyalty.

All the costs of marketing were transferred to the consumers in the form of the price of Nike shoes. The company understands that a great brand will lead to increased sales, but it is costlier. The more consumers who see Nike shoes endorsed by their favourite sports heroes, the better chance they will have to buy-that justifies the extra price.

Nike is very consistent with the regular production of limited edition shoes, and more often than not partners with designers, artists, or celebrities to come up with something original in shoe art that usually costs at a premium. The price is driven up even more by the limited collections since collectors and enthusiasts are usually paid more for something they feel is rare or unique.

Partner with brands like Off-White, Travis Scott and others-which sneakers are often a sell-out instantaneously and resold for multiples over retail on the secondary market. This only further solidifies Nike’s ability to set high price points-through demand, and perceived value.

The basic economics of supply and demand is another important principle in setting the price of Nike shoes. If a particular model is popular, then the demand over supply is usually there to jerk up the price. Strategic release of limited quantities by Nike may very well cause a frantic scramble among consumers to get hold of them before the supplies run out.

Concurring with the above view, the secondary market of Nike sneakers has grown much larger over the past two years, and online sales websites allow users to sell many sneakers at an absurd price. This has paved the way for sneaker collecting culture, which further increases the value of some Nike commodities.

The high price for Nike shoes cannot be attributed only to brand elitism, since the multiplicity of good-quality materials is accompanied by thorough research and development, high-end marketing strategies, and the beliefs of supply and demand. Many of its consumers will be willing to invest since they know buying a Nike is an investment in quality, performance, and style. Whether you’re an athlete or just a fashion enthusiast, Nike remains an attraction to bring consumers into its world of athletic footwear, which is constantly changing. Do you get the hype around Nike shoes, tell us your thoughts in the comment section below.