The Shoe Snob Blog

May 2, 2011

Written by , Posted in News

Shoe Pricing – From Cost of Production to Retail Price

The hardest thing about starting a shoe line, or really just starting your business plan to a shoe line, is coming up with the price that you want to sell your shoes at, retail value. There are so many factors that will dictate what that final price will be, factors that you might never have thought about before, like the fact that retailers will mark up a shoe’s wholesale price 2-3 times over (e.g. wholesale price = $100, retail price would be = $200-$300). But those are just the two end prices, let alone the cost of production versus the cost of what, me, the shoe designer, would pay the factory, for each pair. This is what I am going through right now, as I decide where I want to make my shoes (Italy vs. England) and how I am going to be able to do my best to balance price vs quality. Because all in all, I want to make a good quality, goodyear welted shoe, that can last a good amount of time for my customers, but at the same time don’t want them to retail at way above the common man’s price range. This dilemma is a big one, and has made me realize why some shoes are indeed, very expensive.

Shoes at Top of Page: Allen Edmonds
Shoes Above: Grenson

In my opinion, globalization is the reason that I, and many other designers/makers are having or had this same problem. If you can remember, there used to be a number of fantastic shoemakers in the US, that made good quality shoes, such as Florsheim and Johnston & Murphy. But now, due to the amount of cheap labor and materials, many of those same companies decided to take that lower-priced route and shirked on their quality of labor and materials, thus resulting in shit shoes. Granted, there were a couple of American makers that stood their ground, such as Allen Edmonds and Alden, but even now, you can see where the quality is slowly deteriorating on Allen Edmond’s models, or you will find the same quality, but the price has gone up and you no longer get a pair of extra laces, nice shoe bags or some sort of shoe horn. It’s just the shoes and some cloth that they wrap the shoe around. So when you wonder why shoes are so expensive these days, thank globalization for it, because in reality, the high quality, goodyear welted shoes that you think should be cheaper, in fact should not! Grenson, for example, can make a beautiful, well-made shoe, but they have now chosen to re-evaluate their company, and with that decided to start mass producing by having shoes made in India, with either glued or blake stitched soles so that they could retail at $300-$400. Because their high end goodyear welted shoes, would sell for 350-450 GBP, which would then result to around $700. It’s not a bad thing, it just is what it is. Companies want to stay afloat, and unfortunately because of the way the world is right now, that’s what they have to do.

Shoes Above: Stefano Bemer

Back to my dilemma. I am sitting here thinking, ‘Okay, for my customer, I want to make a high styled shoe. Something classic but with a modern touch yet it is absolutely pertinent that I make a good quality shoe or else I would just be a complete hypocrite.’ This is what I tell myself. But then, I am stuck with knowing that it will cost me around 120 GBP (minimum) to buy a goodyear welted shoe with high quality leathers from a British factory (and who knows what it actually cost them to make it?). Then let’s say that I only want to make 50 GBP profit on each pair. (That’s not asking too much now!) That would mean that my wholesale price would be 170 GBP to sell to retailers. So let’s say that I sell it to retailer X in London. Their price would at least be 425 GBP. You might say that this is not a lot, and when comparing it to a pair of John Lobbs, it’s not a super high price in reality. But now, considering that the British pound is the strongest form of currency and it’s market will only be a small part of my business, we have to take into account what that same 170 GBP wholesale shoe would sell for around the world. So now let’s assume that retailer Y in the States wants to buy my shoes (and the x-rate is 1.6 dollars to the British pound). That would make my wholesale price at $272 which would then make the retail price $680 and that does not even take into account the tariffs that US custom’s is going to tag on. So, to make a simple goodyear welted shoe, with some nice leather that will last the average man around 10-20 years with re-soles, you are looking at 425 GBP or around $700. How many people can afford $700 or 425 GBP shoes? That’s my dilemma!

Shoes Above: John Lobb