Are profit margins ridiculous on shoes, more specifically, running shoes?

Retardalert.. wrote:

profit margins of races..... wrote:

In the 70s you could run a marathon for $5-$7 and buy shoes for $25-$30.

Now a marathon costs $100-$250 and shoes are $80-$170.

While it may be more expensive when compared correctly, you display ignorance by comparing as if $1 then is the same as $1 now. It's not.

Assuming your numbers are correct, from 1970 to 2015, you'd multiply them by 6.23 to get the correct comparison. Shoes would be cheaper on average and marathons more expensive, but nowhere near what you're suggesting.

He said "in the 70s" so it would include 1970 but it would also include 1979, and he is correct, actually he was being more than fair. So the multiplier would not necessarily be 6.23. I started running in 1978 when I was 10. By 1979 I was racing every week. Since I made a whopping $1 per day on my 65 minute paper route, I had to watch my pennies (literally) to be able to go to a race every Saturday and pay for gas and a meal after (when I was 11-12-13).

Races were usually $2-6 (more for marathons - I only ran one in 7th grade - don't remember how much it cost - It was Revco-Cleveland). But I still have some old race flyers or printed results from a few of those races and they were like $4-6 if you got a T-shirt with the race. Some would give you the option to go without the shirt (and then it would be cheaper) and some gave you no choice (hence the TONS of T-shirts we accumulated back in the day). This is one of the reasons why my generation is shocked when they see a $25 tee shirt that is exactly the same as the ones we got for $2-3 ... 35 years ago.

Gas was usually $.75 or so (split 4 or 5 ways) and the meal was $1.50 if we went to McDonalds or the like, and $3 if we went to a "fancy" place (like the Old German). This was in Michigan.

My first running shoes were $14.99 I am pretty sure (the Brooks Villanova). Later I got some LD-1000s from NIKE at a Frank Shorter Sports sale for $10. Many others followed. I think all the ones I got in Middle school were $10 sale shoes or the most I paid was $25 (I believe Holabird and other mail order houses existed but I never bought there -- always at FS Sports).

So, he was being fair and objective and I don't think he was suggesting that we ignore the real value of money, just that what he said (taken at face value) was correct, even a little understated.

Shoes are cheaper in real dollars and undeniably better than the 70s shoes, marathons are big, overblown, over-produced shows designed to appeal to the entitlement generation (gift bags, blankets, mugs, medals, tech tees for everyone).

The Federal Government should step in and regulate the price of running shoes. You know, to protect the consumer and all.

runnerwhoprofesses wrote:

Read Marx. Price must exceed cost for profit to be possible. Workers and consumers are victims.

1/10.

Workers and consumers aren't always victims. Actually read Das Kapital and get back to us.

sadf;jlksadjflsdajfad wrote:

Like any product, there is overhead and a staff who designs and does marketing. Those people need to be paid. Then the retail outlets have to pay their overhead and employees on top of the cost price.

All parties must make a good profit or else what is the point?

None of the employees make a profit, the profit is part of what's left over after they're compensated.

And as with most of the developed economy, these jobs are utterly useless, redundant and frivolous. Who needs a new "improved" design for every shoe model once a year? Who cares what color they are? Who needs a skinny dork in a running store to lie to joggers about a shoe's "stability" and so forth? Nobody. It's just manufactured demand. 99% of the economy consists of people swindling each other.

The only alternative in a developed capitalist economy is 99% of the people unemployed, because the essentials are produced so easily and automatically. The other alternative is the S word. But Americans are terrified of that and would rather pretend their jobs are important and meaningful, and that their work ethic applies to base thievery and waste.

One swindle that still pisses me off is the doubling of the price of whey protein a couple years or so ago. Food retailers bought up most of the product to put into supplement drinks and "greek" yogurt. At first, the whey was delivered to me with great efficiency. Now it's mostly diverted to clueless yuppies who don't need it but are attracted to the expensive packaging and false advertising. It's wasted. But they have to hire a lot of people to do the wasting.

I've been in the biz since the early 80's. Target gross margins are roughly the same...45-52%. A target 50% margin means a $50 wholesale shoe would have a suggested retail of $100. But this varies quite a bit. A brand will offer discounts to retailers that can improve the retailer margin. A brand will accept a lower margin on some shoes it sells as they can be offset by higher margins achieved on more popular styles. A brand can negotiate a lower price from a factory based upon volume purchased.

A decent running shoe FOB (factory price) can run between $18-25+. Labor and overhead costs are much higher than they used to be, and some materials and components are more expensive but there have also been massive increases in productivity over the years which have helped pricing. While FOB price has gone up in the 30 years I have been in the business the relative value of the product (function, material quality, durability, etc) has increased far greater. Running shoes now are far better and more sophisticated than they were in the late 70's and 80's. It's been amazing to watch that change from the inside.

While there's a fair amount of money in the shoe business I am sure that margins are relatively small compared to businesses like soft drinks or Apple electronics.