How much does it cost to manufacture boots I mean how much do they make off us? Any boots I'm not being specific

Alot less then they sell them for!

justsocca has heaps of boots for a fraction of the price of the RRP and they still make a profit!

i viewed the Justsocca site, they have very good prices, i live in Australia i was wondering if you have ever bought anything from justsocca (online) and how many days does it take to deliver.

Happy Days

I posted this info earlier in another topic. Hope it helps-

The actual cost (materials, factory overhead, labor, shipping) of a boots would surprise many people. For a top technical boot made in asia, for example I would guess anywhere around $30 USD. The majority of a boot price is indeed materials, and the outsole alone, especially a fancy FG with carbon fibre or a nylon springplate could easily be around $10-15!

The retail math in general, for most products (no industry secret, pretty true across most products) is=

factory cost + freight and duty = landed cost
landed cost x wholesale markup (the profit percentage for the brand) = wholsale price (the price the shop pays)
wholesale price x retail markup = the retail price (price the consumer pays)

for most products the wholesale markup and the retail markup are around 2.5. This means the retail price of a product is around 6-7 times the factory cost.

Although it does sound like the brand and the store make a lot of money, keep in mind this is top line turnover, not just profit, and needs to pay for all the employees, development, and costs of running a business. 1 mold for an outsole alone (just one size) could easily be $15,000 USD for example. Likewise the store must pay for rent, inventory, emplyees, advertising, etc. Less of course if it is online, where most of the "deals" can be found.

Just something to keep in mind. When you do see a store selling out $200 boots at $50, I can pretty much guarantee they are losing money!

cheers,

R

one other thing- dont forget, you always get what you pay for! top boots cost top prices, for the quality, materials, etc.

and as well something to consider, is the relative difference between different brands that have different costs. For example, with us at hummel, as we have very few big sponsorship and marketing costs, there is less to pass on to the consumer. In effect, the price of any boot from any brand must include all these fancy marketing and endorsement deals...

R

a good rule of thumb for all clothing and other retail goods is that there is about a 400% mark-up by the time the consumer pays for it compared to the actual cost of the materials. Advertising and whatnot costs a great deal, but its a two way street---it doesn't matter what garbage nike and adidas put out, people will buy it, but (no offense mr. rep) how many people actually wear hummels or nomis or the other niche brands? Hummel doesn't advertise as much and they have less customers, so I'd imagine they have to charge more to make the same profit, no?

The workers get paid 50 cents a day so I guess they make a little bit of money off a shoe.

I think your view is a bit backwards. Different companies are different sizes, have different sales numbers, and thus have different profit. It has nothing to do with the price of boots. Companies are not trying to match the level of profit by increasing the boot prices.

Nike for example is a $14B USD company. Adidas is a $7B company. Puma is a $3.2B company. It doesnt mean that Puma has to charge 4 times as much as Nike.

If anything, as mentioned, being a smaller company with less marketing, advertising, etc. costs, means that the boot prices are lowers as they dont need to subsidize these top line costs.

R

but you would agree that your profits are much lower, no? I understand what you're saying, that the advertising and sponsorship can end up adding money on to the final price of the boot, but my question is how much does it actually add on? How much does Hummel advertise compared to adidas? A lot less, right? Then look at the actual prices of comparable high-end boots. There's a Hummel for around $170 in eurosport and I saw one for near $220 a few months back. Those are prices consistent with the predator range, no? Are you saying that your materials are that much better and you are justified in charging that much or is it something else? The other thing that I always come back to is the sponsorship issues---adidas is on AC Milan and Real Madrid, Nike has ManU, Arsenal, Barca, and Inter. It doesn't matter how much they charge or what the materials cost, teenage boys (this entire forum apparently) will buy it!!! I'm sure Hummel is a great brand, but it would appear that the big-volume sellers set the market prices, regardless of whether or not its a reasonable or justified price.

I think you have some terms maybe confused.

When you say profits, what do you mean? Do you mean the total amount of money we earn selling boots? That is Turnover. Or do you mean the amount we make selling boots, less the cost of the boots? Gross Profit.

Or are you talking about margin which is % difference between buying and selling price.

In terms of total turnover or total gross profit, of course hummel is less than Nike. As I mentioned, so is Adidas (about 50% of Nike) or Puma (50% of Adi). But this has nothing to do with the price of boots.

Putting aside dicussion of particular hummel products (ill save that for the hummel thread, but feel free to post there too), to clarify what I said about boot price and marketing, it is that some of the costs for sponsorships, etc. are added to the cost of products.

This is basic common sense. If a company spends X $$$ to make products, pay employees, sponsor teams, do ads, etc., then it must subsidize these costs in the selling price of goods. The end products of most companies are somewhat similar in content (ie. not much difference from one boot to another), but different prices and qualities are partially determined by these additional costs.

Your point about the consumer getting influenced by marketing and buyng anything by X brand or Y players is 100% spot on too. Its a gerat example of why companies do marketing, and how they can effectively use marketing power to influence and offset marketing costs.

As an example, consider that the likely price of the synthetic Beckham Absolute is probably anywhere around 20% less just based on material cost compared the K version. Yet, with Beckham's marketing appeal, it sells for the same, or sometimes even more than the leather version!

R

when I say profits I'm thinking what the company makes on each $200 pair of boots. one obvious difference between Hummel and Nike/Adidas is volume, and you'd think that would enable them to actually lower their prices somewhat---yeah right! So adi-hex isn't a miracle fiber found only on the moon of pluto?! The marketting of new fibers and synthetics is pretty humorous to me. What's the stuff that the vapors are made of, teijin? There's no way that its that expensive or difficult to work with to justify a $200 asking price. I can see the Vapor costing because of the carbon fiber in the heel, but aside from that, I'd imagine that boot is one that is profit heavy for Nike.

on average, as per my first post, the amount a company makes on a pair of boots is pretty standard.

For sure through marketing though, as mentioned with my adidas example, there might be some influence on gross margin and profit. ultimately though, you need to consider the way basic economic laws of supply and demand work. it wouldnt really help a company to sell a boot for a far inflated price, as less people would buy, and they could likely sell more pairs at a lower price.

of course i have no specifics to know the actual price of a vapor, for example, but it is made in Italy, which is much more expensive labor-wise, and indeed the carbon fibre shank and heel parts are very expensive.

For sure you are correct that volume makes a difference in price, but it also usually makes a difference in quality. People pay top dollar for limited production, hand built Bentleys, but for sure a common honda civic is more efficient in cost.

If anything, a company may take a strategy of putting less in materials, quality, etc. into a boot if they can instead spend on marketing and sponsorship to push it to the market.

From my perspective, at hummel, I can say that we put almost all our resources into the product, offering quality, design and materials with little overhead of marketing expenses. Profitability-wise, it all is relatively even compared to other companies of my knowledge, the difference is what the consumer gets in return.

R

I wouldn't say the labor costs that much in Italy---especially when Italy is notorious for sweat shops and borderline slave labor! The leather shops in Milan are packed with Asian workers that are not there legally and that get paid hardly anything. Nike has had problems with this in the past in Southeast Asia as well. You don't think that companies sell things at inflated prices though? Look at the Bentley example that you gave---modern day Bentleys aren't completely handmade and many of them share parts with lesser cars, Volkswagens for godsakes!!! They have yet to reduce the prices accordingly eventhough they are selling many more than ever before. Supply and demand does not rule the economy the way it once did, we are more materialistic and less educated---if something looks flashy and is expensive it must be worth it and we'll pay. I'm sure that Joma makes a quality boot, but it is priced so much less that its competitors that I find myself being suspicious of it and wonder if it'll fall apart the first time I wear it.

I don't mean to sound arguementative or anything, and I am not picking out large companies or smaller companies or suggesting that a lot of figures stated here are false, but I think sometimes the consumer gets a 'dog and pony show' regarding facts and figures and costs just to justify how much you are paying in the end for a product. Sometimes I find it utter non-sense to believe companies and stores don't make that much when small shops that pay all these fees for the boots, rent, electricity, advertising, etc. and don't have customers flying out the doors yet they are still "balling." Something has to give somewhere down the line where the facts and figures don't add up for those selling the products and making the money.

But one thing I won't argue with, I am sure with some sales they do lose money - but how much money is lost overall is another story.

some trainers/sneakers cost less then a pound to make

unless you are talking about a thong sandal, no way. trust me. cheapest garbage no-brand trainer at a discount no-brand store would cost min. around $5USD to make.

R

the declared value of most trainers entering the US is between $3 and $7---including JOrdans that sell for $150

what do you mean "declared value?". the cost to manufacture a pair of jordans is no way $7. unless you mean those baby booties for infants,

seriously....check my retail math above- your number doesnt make sense. by my own guess i would say a top trainer like jordans would be more likely $20-30 USD FOB cost.

r

I mean declared value when it is on the boat at customs in the harbor. For tax purposes the declared values are the materials only, no advertising or anything else figured in. This means that the customs or duty or tariff will also be much lower allowing Nike or whoever to pay very little in taxes and still be able to turn a profit. For what they actually cost to produce, market, and distribute its higher, obviously. My uncle is a customs official in NYC and has seen the paperwork for the container ships bringing them in to America.

For other goods the mark-up is high as well. I have a side job as a screenprinter making vacation souveniers. They have a simple logo on them and sell for $20 at resorts on the east coast (Orlando, Cape Cod, LAke George, etc.). The $20 t-shirt is purchased from a wholesaler for 70 cents!!! The wholesaler is buying them from someone in Honduras, but think about it, the wholesaler has to turn a profit selling shirts at 70 cents, so what must his cost be, 5 cents? I have no idea, but there is profit for every member of the chain. My employer must pay me, the mortgage on the shop, transportation costs, ink and supplies, but there is a great deal of profit for him, close to $10 a shirt as we can print 2000 shirts on a good day.

declared value for customs should be the fob (freight on board) cost. which is the cost of the boot as per my breakdown above. check your numbers and the std retail math.



r

Richard, how much do the numbers change due to volume? I mean, Nike has roughly 35% of the boot market, correct? Adidas has around the same. Between the two of them that's 70% of the market cornered. Suppliers realize this and undoubtably cut them a deal on prices---cheaper leathers and synthetics, cheaper shipping rates, cheaper boxes, cheaper everything. Hummel and all the rest account for 30% of the market added as a whole---you and your direct competitors (Puma, Joma, Lotto et al) must pay more for materials as you're not buying in the same volume as the big boys, correct? That would change the cost FOB or declared value of your products compared to Nike and adidas, right?
Buying in bulk always lowers the prices---even eurosport cuts the prices for teams! Does this change this discussion? Hummel is making less units than Nike, spending what I'd reason to be more on the actual cost of the boot (no advertising yet) or am I mistaken. I must say that discussion has been rather enlightenning.
As for your statement that a mold costs $15,000 to make, I knew they were pricey and thought it was more than that. I've read (in evo) that to tool up to make a new tail-light it can cost an automaker close to $300,000 to go through the whole process which is why many small volume companies "borrow" parts from other cars---Lotus has always had parts from Peugeot and Ford to save money. On that note, do footwear companies ever "borrow" design elements or use a competitor's boot to start the design process?

good discussion indeed!

for sure you are correct that volume will affect prices. of course nike or adi would pay a little bit less than hummel if we made the same boot as they have much larger volumes. the difference i would expect though would not be that much. of course i dont know nike's exact buying prices, but i would be surprised if it would more than 5-10% lower.

volume can also affect quality too. if you are making 10000000's of boots, more is automated, and mistakes can slip through the cracks. back to my example of the more labor intensive handbuilt cars. while hummel boots and nikde boots generally use the same manufacturing processes, lower volumes can sometimes produce better quality, as they can be made more slowly, with more handwork, inspection, etc. if we make 1000 boots, we can have a QC inspector check every pair. you cant do that if you are making millions, and need to settle on check maybe 10% of the production.

as ive mentioned before with the big boys, theres also the added marketing $ subsidy that may be added to a profit margin to cover big investments like sponsorship, ads, etc. all the cost just go to the overhead and need to be paid for somehow.

regarding the mold. to be clear, the $15,000 number is PER size. so opening a 10 mold range ie. size us 5-15 would be 10x15000. i would certainly believe car parts may cost more. usually lots bigger, maube more complex, etc.

most dcent sport companies dont "borrow" parts, but rather make better use of the investments they already have made. like less different molds, or using them for a few seasons for example.

for cheaper boots, and some iffy brands though, you will see use of open "public" molds that are usually copies of real branded boots where you can just add your own logo. check the kelme copying nike thread here on sp, and you'll see what i mean with the nike legend lookalike outsole.

cheers,

R

wow I think I learned something

Tough reading there

wow only 5-10%, that's less than I'd thought, but that will add up over a few million boots. You've just about talked me into a pair of Hummels actually, but I'm looking for a place to try them on around here. Pittards isn't your creation, if I remember correctly they made leather for Puma years ago, correct? How does having a name-brand leather affect costs? Nike and adidas don't tan their own, they purchase it from someone, but they also don't tell you who, probably because its from multiple sources. Is it more costly to have Pittards or do they cut you a break since their name is in all your press materials and in the catalogs with your boots?