In-Depth Insight of Nike Air Jordan Sneakers

In-Depth Insight of Nike Air Jordan Sneakers

In-Depth Insight of Nike Air Jordan Sneakers

 

The world of basketball shoes was quite dull until 1984 when the sneaker industry underwent a breakthrough. The primary sports or running shoes could be found mostly in plain white colors, with minuscule aesthetic appeals such as extra tread, logos, or support. However, nobody knew that a single player could turn things around. A new epoch of sports marketing was about to emerge.

 

Initially recognized as Blue Ribbon Sports, the company took inspiration from the Greek Goddess of victory and renamed itself "Nike." Typically, Nike's focus was on athletics and running, but the crossover soon emerged into more appealing sports.

 

In 1971, Nike launched the swoosh symbol as a logo for its products. Fast-forwarding to 1984 after several successful and iconic products, began a new era of success.

 

In 1984, the NBA welcomed a new star player with a promising future. Since the start of the season, Michael Jordan's incredibly talented gameplay has stood out in everybody's eyes.

 

It was a risk for Nike when it signed an exclusive deal with the young athlete, Michael Jordan, to start and manufacture his own shoe line.

 

Ironically, Jordan had been wearing Adidas for his entire life but was mesmerized after meeting the Nike executives and signed the 5-year deal. We know Jordan shoes can be quite pricey, but how much does a Jordan cost to make?

 

Facts Why Nike Jordan Sneakers Can Be So Pricey

 

  • Nike Air Jordan sneakers tend to be more costly than a typical pair of basketball sneakers. For instance, the Jordan 1 Retro Fragment is expensive and highly demanded that it can be resold for as high as 2000 US Dollars.

  • Nike produces and promotes its legendary shoes to surge the value of its respective brand, Jordan, which entered the sports apparel industry in the '90s.

  • The Air Jordan 1 received a lot of credit for being the catalyst for sneaker culture.

  • The Jordan 1 Retro Fragment initially retailed for 185 US dollars when it was first introduced in 2014. In present times, a pair of Jordan 1 can be sold for even 2,000 US dollars.

  • The primary reason why Jordan brand can be so highly priced is due to the extensive branding it does for its legendary sneakers.

  • It is produced and manufactured in China, where tariffs imposed are much higher.

  • It is produced in some of the most reputable and renowned shoe factories. Hence a higher cost is incurred.

  • Nike Air Jordan sneakers comprise more material since basketball shoes require more considerable shoe material than running shoes.

  • While the standard price of an average basketball sneaker might be around 120 US dollars, a Jordan sneaker might cost about 145 US dollars.

 

The Cost of a Pair of Jordan Sneakers

 

As mentioned above, a pair of Jordan sneakers can cost quite a fortune, so what really is the cost that Nike has to bear in producing a pair of Jordan? The American retail price for a pair of shoes starts at 185 US dollars. The shoe stores purchase the shoes in bulk from Nike at wholesale rates.

 

This reduces the retail price by 50%, which amounts to a wholesale price of roughly 90 or 93 US dollars. If it is a thriving and well-reputed retail store, they can receive a 3-5% discount at most, or zero freight charges. For this article's purpose, we will give you an in-depth insight into Nike Air Jordan XXXI's making and costing.

 

  • Nike Air Jordan XXXI

 

Talking about a Nike Air Jordan XXXI (31) pair, Nike probably does not need to grant any discount to retail stores. Contrariwise, these retailers might be on the lookout for higher profit margins, mainly because Air Jordan 31 are in massive demand.

 

The retail stores are well aware that these particular shoes can be sold at inflated prices. Just like that, the retailers can take 50% off the price of Air Jordan from the top. The noteworthy question is why does all the profit go to these retail stores?

 

  • Retail Store Costs

 

Take note, the store has to provide wages to their employees, pay the bills for lighting and air-conditioning, and pay the rent for the store location. It is also possible that they have taken loans or borrowed money to purchase the shoes from Nike.

 

This is why retail stores collect around 50% of the profit earned from shoes, but at the same time, they need to cover all these core expenses. Even though the Air Jordan 31 shoes will quickly sell out, there are many other shoes that the store needs to sell, and that too at a discount.

 

Nike's Cost and Revenue Breakdown

 

Now the question arises, How much money does Nike earn? It is essential to understand and clarify that the shoe factory is not owned by Nike. Out of all the reputable and well-known shoe brands, New Balance is the only brand with its own shoe factory.

 

So, in summary, Nike pays roughly 25 US dollars per pair to the factory for a $185-dollar priced shoe.

 

  • Shipping Charges

 

How can Nike sell a shoe for 93 US dollars for which it has only paid 25 US dollars? After Nike purchases Air Jordan 31 straight from the shoe factory in China, it needs to get shipped. Most of Nike's shoes are shipped via sea freight from Indonesia, China, or Vietnam to the United States of America.

 

It takes around 4000 US dollars to send an ocean crate across the sea. One container can fit roughly 3000 pairs of high-top shoes. The entire process of shipping, as well as other fees, amount to $1.50 per shoe pair.

 

  • Import Duty Charges

 

After the shoes reach the United States, it has to be imported legally. If it is a leather or fabric sneaker, the US government charges 20% import duty of the Free On-Board price. This adds another 5 US dollars to the shoe's cost.

 

The shoe that is now in the warehouse amounts to a total of $25 + $1.50 + $5.00= $31.50

 

  • Royalty Fee

 

The next part comprises paying a royalty fee to Michael Jordan for being the leading basketball player who has lived to be a symbol on their shoes. Determining what the royalty fee should really amount to is a challenging task.

 

The Jordan brand sells for more than 2.6 billion US dollars, in which Michael Jordan receives $100 million. In simple words, Jordan gets approximately 5% of the wholesale rate, which is roughly $ 4.63 or more on each pair.

 

  • Profit Margin

 

The total price of producing Nike Air Jordan 31, shipping it, and paying a royalty fee to Michael Jordan calculates to $41.30. So, this leaves Nike with a total profit of approximately $52, which is 55%. This is quite a standard rate for shoes. The fashion shoes can be more than, whereas discount shoes can be less.

 

  • Management Expenses

 

The calculation still does not end here. Out of this $52, Nike has to pay off its product managers, designers, sales managers, developers, marketing managers, floor sweepers, administrators, quality control staff members, advertisers, athletes, and more. So, in reality, the amount of profit that Nike earns per pair of Jordan sneakers may be lesser.

 

Nike Air Jordan Unique Logo

 

The initial logo designed for Air Jordan differed from what it is today. Known in the modern world as a Wing logo or an OG logo, the logo features a picture of a basketball with attached wings springing out from both sides and an "Air Jordan" printed on top of the ball.

 

This "Jumpman" logo can be seen starting from the third version of Nike Air Jordan, which was launched in 1987.

 

It basically originated from a photoshoot in Life Magazine that was covered for the Olympics in 1984. Initially, the picture was inspired by Jordan while performing a mid-air ballet turn known as a Grand Jete.

 

In an interview held in 1997, Michael Jordan explained how he accomplished this move. At that exact moment, his picture was taken. The initial image drove Nike to reshoot it for the sneaker release in 1985. It first incorporated it as a brand image and photograph, followed by designing it on the shoe.

 

The Player That Became a Product

 

Michael Jordan has been the first NBA player that connected with a product instantly after he joined. His performance on the court made him stand out like a celebrity. His ability to fly stimulated interest within the public to own this timeless piece.

 

Air Jordan updated its design every few years, with more and more new features upon arrival. The Air Jordan III launched in 1988 was worn exclusively by Michael Jordan during the Slam Dunk Contest. Moreover, this personally has to be one of Jordan's all-time favorite designs over the years.

 

Today, Nike Air Jordan includes more than 32 varied versions of the sneaker. Some of them have also been re-released many times. The Jordan sneakers go out of stock as quickly as they are released into the market. A lot of pairs are even resold on the internet to sneaker collectors.

 

Air Jordan's Most Famous Moments

 

Many Air Jordan sneakers that have been worn by Michael Jordan during his games have been put on auction, sold, or donated for charity in the last few years. The most esteemed pair of Nike Air Jordan, i.e., Air Jordan 12 in the "Flu Game," was worn during the 1997 NBA Finals by Michael Jordan.

 

In this match, he was not feeling well because of food poisoning but still managed to be victorious. This one pair of shoes were sold for an unbelievable price of 104,000 US dollars. The design itself is so remarkable that it goes out of stock as soon as it gets re-released.

 

The Jordan Legacy Continues

 

Following the epoch of Michael Jordan, many other NBA players have also entered the business of custom-designed shoes and sneakers. These include Kobe Bryant, Kevin Durant, Stephen Curry, and LeBron James, to name a few. Still, no one has yet matched or surpassed Jordan's legacy and successful range of shoes.

 

On its 35th anniversary, Nike Air Jordan introduced the time-bound Air Jordan 1 High OG. This exclusive shoe has to be one of the most extravagant Air Jordan 1 in the history of this brand.

 

With only 85,000 pairs manufactured, the retail price tag has been set at an alarming price of 2,000 US dollars. This presents an idea of the costs and expenses incurred to produce such an expensive pair of shoes.

 

In Conclusion

 

Even though Jordan has retired as a basketball player, he is intimately a part of the selection and designing process of these shoes, along with Tinker Hatfield, the respected designer.

 

With over 2 billion US dollars net worth, Michael Jordan earns approximately 130 million US dollars annually via the sale of his branded shoes. The Nike Air Jordan brand share experiences a 17% growth rate every year and yearly revenue of more than 3 billion US dollars.

 

 


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