17 Shocking Reasons Why Nike Is So Expensive

You landed on this article looking for valid reasons: Why Is Nike So Expensive? There’s a long and short answer. But first, I know it can seem criminal the amount Nike charges for their products; we all want to save money. 

To answer your question accurately, I looked through 300 pages of NIKE reports and emailed them (they didn’t respond this time) but it’s all good.

Short answer: They need to run a profitable business, simple. Plus, they are the Best Sportswear Brand -Here are 9 Unthinkable Reasons Why.

Long answer: Very simply, their goal is to create sportswear products that enhance athletic performance, reduce injury and maximise comfort while reducing waste. This requires a lot of investment into the reasons listed below. 

Related Article: Dunks are extremely popular right now; check out Why Are Nike Dunks So Expensive? (3 Cheaper Options)

If you want to get more value for your money and not buy expensive sneakers, you should also consider bulk buying sneakers from reliable sources online.

17 Reasons Nike Is So Expensive

1. Product Research, Design, and Development

Nike has a competitive advantage in the sportswear segment as its goal is to produce products that help to enhance athletic performance, reduce injury and maximise comfort while reducing waste.

They are seen as a premium brand that is constantly innovating new materials and technology, making its products expensive. 

Product Testing – Athletes with sports marketing contracts and product testers provide feedback on footwear and apparel products throughout the design process. Discover the sneakers took over 5 years to design and test!

Research committees and advisory boards consisting of athletes, coaches, podiatrists, and other specialists consult with Nike to review specific designs, materials, and concepts. This costs money.

Responding to consumer preferences with the introduction of innovations such as Nike Air, Zoom, Free, Flywire, Dri- Fit, Flyknit, Flyweave, FlyEase, ZoomX, Air Max, React, and Adapt technologies. 

Finally Announced – Best Walking Shoes With Insane Nike Innovation Comfort

How much does Nike invest in innovation?

Related Article: Do your trainers sometimes hurt? Here’s a list of the Best Nike Shoes For Wide Feet; start walking in comfort.

2. Limited Edition Collaboration 

Any Quickstrike (limited edition release) Nike Dunk released usually commands a higher price than the general release pair it is inspired by. For example, the Concepts x Nike SB Dunk “White Lobster” which were released exclusively as friends and family pack of the retail store. Usually, such limited models require more creative development, another reason why the Dunk is so expensive. 

The “Viotech” Nike Dunk Low was released in 2001 as a Japan-exclusive Co.Jp and in 2013 and 2019 for the rest of the world at select Nike retailers. They were released for a retail price of $120 but they resell on the StockX marketplace for close to $400. 

3. Marketing 

Nike market it’s brand and products with endorsement contracts, complimentary products, television, digital and print advertising media platforms, brand events, and retail brand presentation.

Recently Nike has invested heavily in digital marketing to meet the increasing digital demand from consumers. Between 2020 and 2021 digital sales accounted for 67% of sales and store sales declined due to reduced footfall because of store closures. Therefore some products had to be increased in price such as the Nike Dunk from $90 to $120 retail price.

Marketing Example 

The Nike Air VaporMax Moc 2 X Acronym 2018 release saw a promotional video featuring Acronym ® founder Errolson Hugh and guest-starring John Mayer (Singer, Songwriter). Such marketing strategy and material require a large upfront initial investment that makes the Vapormax more expensive than other sneakers. 

4. Competition

Nike faces intense competition from adidas, Puma, New Balance, and many other brands in the following areas.

• Product offerings 
• Technologies
• Marketing expenditures 
• Advertising
• Endorsements
• Pricing 
• Costs of production 
• Customer Service 
• Digital commerce platforms 
• Digital services and experiences 
• Social media presence

If they do not anticipate and respond to their competitors, costs may increase, and demand for products may decline. Having to account for all the threats they face from competitors makes Nike products expensive.  

5. Consumer Perception 

Nike products are associated with improving athletic performance, reducing injury, and maximising comfort. The continual innovation of new designs and manufacturing innovations makes Nike products cost more. Consumers are willing to pay higher prices for Nike merchandise as it’s associated with high quality on and off the court.

For example, the VaporMax contains the most air of any Nike Air Max ever produced. When the engineers at Nike were designing the VaporMax it took them 5 years to develop the air bubble two-part midsole. 

The VaporMax range is one of the most expensive sneakers Nike manufactures some pairs retail for $250 (£220) or more.

Negative Perception  

• If Nike fails to introduce technical product innovations, consumer demand could decline.
• Product quality issues could mean they face substantial expenses to fix problems and loss of consumer confidence.
• Actions taken and statements made by endorsers could harm the brand image. 
• Failure to enter into cost-effective endorsements could affect sales and profitability. 

6. Endorsements

Nike products are expensive due to the relationships they have with athletes, sports teams, and leagues, as well as other public figures to develop, evaluate and promote our products, as well as establish product authenticity with consumers. There are often contractual monetary obligations they need to meet for the endorsement of products, some are worth millions of dollars over several years.  

Payments may be higher as some contracts have bonuses for athletic achievements (e.g. winning a trophy) and/or royalties for certain product sales. May be lower if athletic performance declines. 

Athletes – Costs for establishing and retaining sponsorships for athletes increase year on year for Nike. If endorsements with athletes cannot be maintained Nike could lose the visibility with their target audience or on-field authenticity of products. They may need to increase their marketing investments. 

Celebrity – Rapper Drake has an ongoing endorsement deal with Nike under the sub-label NOCTA various basketball merchandise, sneakers and sportswear has been released. 

Esports – “Esports tournament organiser BLAST Premier partnered with Nike for a merchandise project. Co-branded collection that showcased gaming lifestyle.” (EsportsInsider, 2022)

7. Overhead Expenses  

• Salaries and benefit-related expenses
• Research and development costs 
• Bad debt expense 
• Administrative expenses (rent, professional services, meetings, travel, etc)

In 2021 overhead expenses increased by 4%, due to an increase in:

• Strategic technology investments,
• NIKE Direct variable costs, 
• Restructuring-related costs ($255 million)

8. Retail Store

Roughly 1,043 retail stores are leased globally, mainly consisting of Nike Factory Stores. Some store leases expire up to 2043.

9. HQs and Offices

The NIKE World Campus, owned by NIKE and located near Beaverton, Oregon, USA, is a 400-acre site consisting of over 40 buildings, with some leased properties. 

The Nike Hilversum Netherlands headquarters is leased and is the hub for non-U.S. operations. 

In China offices are also leased in Shanghai, China this hub is focused on implementing wholesale, NIKE Direct, and merchandising strategies.

10. Distribution Centres

Some distribution centers are owned by Nike some are leased. 

11. Air Manufacturing Innovation Facilities 

Air Manufacturing Innovation, manufactures cushioning components used in footwear at NIKE-owned and leased facilities in Beaverton, Oregon, Dong Nai Province, Vietnam, and St. Charles, Missouri.

Air Manufacturing Innovation also manufactures and sells small amounts of various other plastic products to other manufacturers.

The research and development that went into designing required 350 runners to test the sneakers. The combined distance it took to test the sneakers is equal to running around the earth 5 times approximately 124,505 miles (200,375 kilometers).

Related Article: Did you know the Nike VaporMax costs £100 ($115) more than the Dunk? Here are 5 Fascinating Reason You Didn’t Know.

12. Manufacturing

Nike is supplied by 191 footwear factories located in 14 countries. All footwear is manufactured outside of the United States by over 15 independent contractors. As well as agreements with manufacturers in Argentina and India, for sales in those countries. 

Sportswear apparel is supplied by 344 apparel factories in 33 countries. The largest apparel factory accounted for 8% of total NIKE Brand apparel production in 2021. Contact factories in Vietnam account for 30% of total NIKE brand apparel production. 

Nike is not entirely in control of the price quoted by suppliers and contractors availability of raw materials fluctuates, causing their products to retail at higher prices. 

13. League Sponsorship

Nike sponsors the official Premier League ball the partnership has been ongoing since 2000 starting with the Nike Geo Merlin ball in 2000/01. 

“Under the deal, Nike provides kit and equipment for the Premier League’s youth development, and international events and supports the Premier League Primary Stars Kit and equipment scheme that benefits schools in the United Kingdom.” (Premier League, 2018)

14. Renewable Investments (Net Zero By 2050) 

Nike is investing profits heavily into meeting the following net carbon zero targets, generally, the cost of renewable energy is more expensive than fossil fuel energy. 

• Converting to environmental raw materials
• Converting factories to renewable energy 
• Coal elimination 
• Air freight reduction
• Renewable electricity 

15. Employee Pay & Benefits 

In 2021, Nike had approximately 73,300 employees worldwide, including retail and part-time employees. Independent contractors and temporary personnel are also used to supplement their workforce.

The cost of such a large and diverse workforce is the main reason Nike products are so expensive as this needs to be accounted for. 

US Employee Population 

• Retail – 48 %
• Air Manufacturing Innovation Facilities – 3.5%
• Distribution Centres –  3.5%
• Corporate – 35% 
• Other – 10%

16. Community Investment 

As part of Nike’s commitment to supporting organisations working to level the playing field and address racial inequality, they are investing a total of $125 million up until 2025. In 2020 $23.4 million and 2021 $36.6 million was invested. 

As a brand it is important they have a positive impact within the community. Such activities help align the brand with positive experiences in consumers’ minds therefore willing to pay more for products they purchase. 

17. Software Development Costs

Computer software purchases and software developed for internal use are often customised for the needs of the business. Software used for manufacturing and design, payroll, and other specific business activities. Often training to use software is needed, as maintenance and other post-use activities.  

Expensive Nike’s FAQs

Where does Nike source its raw materials?

NIKE’s independent contractors and suppliers buy raw materials for the manufacturing of our footwear, apparel, and equipment products. Most raw materials are available and purchased by independent contractors and suppliers in the countries where manufacturing takes place.

“Since 1972, Sojitz Corporation of America (“Sojitz America”), a large Japanese trading company and the sole owner of our redeemable preferred stock, has performed import-export financing services for Nike.” (Nike, 2021) 

What material does Nike use?

Nike Shoes 

• Natural and synthetic rubber 
• Plastic compounds 
• Foam cushioning materials 
• Natural and synthetic leather 
• Nylon 
• Polyester and canvas 
• Polyurethane films are used to make NIKE Air-Sole cushioning components.

Nike Apparel 

• Natural and synthetic fabrics 
• Yarns and threads (virgin and recycled)
• Specialised performance fabrics – Wick moisture away from the body, retain heat, and repel rain
• Plastic and metal hardware

Lee Mlilo Founder & Content Writer

I’ve been reviewing, buying, selling, and rocking sneakers since high school. Learned a lot since my first pair when I was 7 years old were And 1s (if you know you know). A lot has changed since the brand started in 2017 from reselling sneakers to now reviewing and writing informational content. The aim is to be authentic and honest with my opinions. Saucedby Lee out 🙂