Why do Nike products cost so much
What do you really pay for in retail?
Trade example 1: sneakers for 100 euros
The prices for textiles in particular are difficult to estimate. With sports shoes or sneakers - whether Nike, Adidas or New Balance - you can get rid of around 100 euros very quickly. The seamstress of the shoe, who often works in Bangladesh or India, earns only 40 cents - that is 0.4 percent of the total pricethat the buyers, i.e. we, pay. But who gets the rest of the 100 euros?
In order to want to make a shoe, you need materials. They cost the factory 8 percent, that would be around 8 euros. Production is not limited to the work of the seamstress, the material often has to be tanned and dyed, and the factory also has to generate income. The cost of production without the seamstress' wages adds up to 4 to 6 percent, that's around 5 euros. A similarly large share is taken up by the transport and customs duties, and the intermediaries, so-called distributors, also have their share of this. In total, that can be up to 7 percent.
But the two biggest pieces of cake get the brand and the sports shop where we buy. The brands that commission the shoe get a third of the 100 euros. The costs of the brand can be divided into almost equally large thirds: development, marketing and profit. The 50 euros we pay for the sneaker go to the shoe store, which means: The store buys the shoes for 50 euros and puts the same on top.
Trade example 2: a smartphone from Apple
Many of us now own an expensive iPhone, the price of which is increasing with each new generation. While the iPhone 8 is available for less than 1,000 euros, the iPhone X also cracks this mark. But how does the immense price come about? In 2011, US market researchers uncovered Apple's production costs. The new price of an iPhone 4s at that time was 629 euros for 16 gigabytes of storage space - today's models are above this price, which could be due to rising production costs, inflation and improved technology.
The percentages cannot be transferred one-to-one to the latest iPhone models, but they are certainly of a similar size, since Apple also wants to continue to make its profit.
Behind every cell phone there is technology that we pay for: the development of the operating system, the material costs, the storage space. But these things are far from taking up the bulk of the price. The market research company iSuppli found that the production cost
an iPhone 4s to $ 188, i.e. the equivalent of about 134 euros. The researchers calculated for screwing the model together only 8 euros, So the wages of people in developing countries are barely noticeable in the price we pay. So we spend less than a quarter on the production costs of an iPhone. For Apple, as probably for most cell phone manufacturers, this means that more than 60 percent of sales are generated by the company itself.
However, this sum cannot be described as a profit, after all, the company has to bear development, licensing and distribution costs. However, other corporate researchers assume at least 49 percent net profit when selling an iPhone that goes directly to Apple - a big plus.
Commercial example 3: milk
You can get milk in discount stores from currently 60 cents. Organic milk or a higher fat content can lead to a price increase of up to 40 cents. Assuming exactly 66 cents for a liter of milk with a fat content of 3.5 percent, the farmer gets almost half of it, namely 31 cents. This raw milk price differs from state to state and from dairy to dairy.
The second largest part goes to the dairy, just under 15 percent - that's a little more than 9 cents. In third and fourth positions are with 12 percent of retail and packaging costs: Almost 8 cents. Another 7 percent does it value added tax off, that's about 4 cents. Storage and transport cost a little more than 2 cents. The "Green Dot" and the recording costs each take 2 percent, which is less than 2 cents.
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