This post was written by contributor Brendan Ross.
Every month of my life, I hand $800 to a friendly woman one building over. As much as my checking account despises it, my rent is the largest “small price to pay” I’ll ever incur: without it, I couldn’t legally live indoors. So, when I recently saw a Facebook ad for some gorgeous $200 luxury sneakers from the brand Greats, I got to thinking: is a sneaker ever worth one week of rent?
First, let’s start from the top: why do sneakers even cost this much? After some research, I found five key cost drivers for shoes:
1. Material quality
3. Retail markup
5. Company expenses
As for quality, the sneakers in the ad had it in spades. The Greats “Pronto” is a classic leather luxury sneaker made from premium Italian leather and lined in calfskin, sitting on top of a sturdy Vibram outsole. The shoe also had technical detailing like 3M accents around the toe.
Then, there’s the construction: the Pronto is handmade in Civitanova (a small town in Italy’s world-famous “Shoe Valley”) by the same craftsmen who work on many of the world’s foremost luxury brands. The same hands likely put the same time, effort, and care into stitching the Greats as they did anything from a big-name fashion house.
Here’s where it gets ugly: for most sneaker brands, retail markups account for more than half of a shoe’s sticker price. A 1995 study conducted by the University of Michigan found that $35.50 – over 50% - of a $70 sneaker went straight to whoever ran the physical store it was sitting in. Here I was wondering whether a $200 sneaker was ever worth it; a better question might be whether that sneaker was even worth $100!
Next, there’s the advertising. The cost of every big sponsorship deal has to come from somewhere, and you bet it’s going into the products. That same Michigan study estimated advertising accounts for 11% of the pre-markup cost per pair, meaning a $200 sneaker that costs retailers $100 will end up taking $22 out of a customer’s wallet. That’s, like, 2 whole burritos just to put James Harden in slo-mo.
Finally, someone’s gotta keep the lights on at headquarters. Sadly, that someone is you. A 2016 study by running website SoleReview estimated that it costs mega-brands like Nike and Adidas around 25% of a pair’s pre-markup costs just to cover administrative expenses. Considering their size, scale, and five-digit payrolls, it’s no surprise it costs Nike/Adidas a lot to run their companies. What is surprising is that I’d pay $50 – a little over two days’ worth of rent – just for the privilege of helping them do it. Maybe bigger isn’t always better.
So if more than 70% of a $200 sneaker’s price goes into everything except the shoe, why am I typing this wearing Greats Prontos?
Simply put: because Greats cut the shit out of sneaker-buying.
First, unlike the other brands, Greats doesn’t sell to retailers. As an e-commerce sneaker start-up, they can efficiently manage then ship all their orders without leaning on physical stores, meaning your $200 shoes are actually worth $200. Goodbye, bloated markup.
Second, because Greats was born online, they’re not tied down by bulky ad budgets and superstar endorsements. The company grows through social media and word-of-mouth, meaning your lunch money goes towards Chipotle instead of Lebron’s new home theater. No hard feelings, L-Train.
Finally, Greats is a small, Brooklyn-based start-up! There’s no ridiculous “global administration” costs to cover. If anything, a few bucks from my Pronto’s went towards pizza for the interns. Lord knows they need it.
The takeaway? Instead of going towards outdated retailers, overpaid superstars or department store rent, my $200 went towards the handstitched, Made in Italy leather sneakers on my feet. I might be eating ramen for a few weeks to make rent, but after learning about Greats, I just couldn’t pass.
The looks? Incredible. The comfort? Out of this world.
And the price? Worth every penny.