Those statistics say that the labor costs $2.75 per shoe to make. Nike sweatshop employees didn't make $2 per DAY back then (or even now, for that matter), even with forced overtime. Meanwhile, there's a whole US-based department for product testing and development, and I assure you it commanded more than $.025 per shoe to run. Take the testers alone. Even if they got paid in products vs. cash, the cost of the products by nature would exceed $.025/shoe. Yet according to those statistics, the claim is that the cost of labor was 11x greater than what the R&D cost? Sorry, but I don't buy that for a second.
And where is MJ's cut of the profits in that equation (another cost that has to be recuperated)? I don't know off hand what he was getting in '95, but he was given $500k/yr by Nike for the 1st 5 years+ a piece of the revenue earned from sales to start things off. He had to still have been making at least that much by '95. Why isn't that factored into the cost? What about the team of designers? Did they work for free? I'm pretty sure Tinker Hatfield's salary alone had to add more cost than the labor per shoe. Is that $.25 claiming to have encompassed all those costs into the shoe?
And it looks like these are averages of Nike shoes in general? That doesn't help when we're talking about a specific line of a brand, especially when that line is considered to be amongst their flagships in performance. Obviously, a low end Nike eradicates a lot of costs (less extensive R&D, less time/talent spent on design, endorsements, marketing, etc).
I don't think anyone is completely disregarding inflation. Of COURSE it's a factor. I'm just pointing out that inflation alone in no way, shape or form justifies the price increases, nor is it even the biggest factor. The main driver of price in this case is sales. Nike keeps bumping up the price of the product, and the product keeps selling, so why would they stop? That's every business' dream come true. If tomorrow, everyone and their brother decided to stick to some principals for once and stopped buying AJs they're less than satisfied with, JB would be forced to reevaluate their product quality and/or pricing. But since that's not going to happen, they will continue to increase prices (thus profit margins) until they find that ceiling price where it won't sell anymore. Again, good on them for milking the cash cow, bad on consumers for continuing to provide the milk.
There are several factors on why one product would sit over another. When the infrared VI pack came out, believe it or not, as rare and sought after as they were, there were still places that had a pack or 2 sitting even a couple weeks after release. Does that mean they were charging too much for them, or that they weren't as popular as first thought? Not necessarily. Part of the problem was that it followed on the heals of the non-infrared release. It's about timing, popularity varying from region to region, quantity produced, etc. For example, if they can sell a decent chunk of Foams at $250, then "reduce" them to $200, or $150 to get rid of the rest, they still come out that much better than starting them off at $200 or $150.
The real question you should be asking is if inflation is a major factor in the price increases, why aren't the percentages of the price increases from shoe to shoe a bit closer?
What's up, Rob!? Just living the dream. Thought I'd pop in since it's been a while. I see nothing's changed.
