I’m talking about the shoes. Around here they cost about $30 which on the one hand seems like a bargain because a good pair of sandals would cost a lot more. And of course they have a lot of advantages over sandals. So I’m putting the product down. I am a Croc fan. On the other hand, how much do they cost to make? They are basically a molded product with two rivets. I’m going to guess that these are made offshore and that they cost about $5 tops to manufacture (maybe a lot less). Throw in shipping, packaging, design costs etc and we might top out at $10. That leaves a huge profit margin. These things are everywhere The designers must be billionaires by now.
Are there any experts out there who could narrow the costs of this product more accurately? Is a 200% or 300% markup normal for a product?
Leaving aside the other costs of buying crocs (e.g. the loss of your personal dignity) a 200% markup is certainly not normal, and isn’t normal for shoes, either. You’re implying two assumptions here that are both false:
1. That the manufacturing cost is how you determine the markup. All shoes are cheap to make. But the cost of selling you the shoes far exceeds the original manufacturing cost. The shoes must be packaged, transported, marketed, and displayed. The person who sells you the shoes has to be paid. The store has to pay rent on the shoe store where you buy the shoes. The store has to invest in operating costs and loses money to thieves by virtue of running a store. The trucking company that hauled the shoes to the mall must be paid. Those things aren’t cheap.
Retail stores don’t make big profits, for the most part.
- That cost has much to do with price anyway. The price of shoes, or any other consumer good, is set at the equilibrium price - essentially, whatever will bring in the most total margin. If that figure is $30 a pair that’s what they’ll charge, and if it’s $300 a pair they’ll charge that. Shoes are especially market-driven; all shoes cost basically the same amount to make, within a few dollars, but people will spend $700 on a pair of Manolo Blahnik shoes that are exactly identical to a pair of $29 shoes sold under a generic brand at Wal-Mart; in fact, in many cases the same items are made at the same factories and sold under different brand names for different prices.
That’s a bit of an overstatement, even if you mean that all shoes of similar styles cost the same to make. A pair of Italian hiking boots, hand-made from one piece of waterproof leather, dose not cost the same to manufacture as a pair of mass produced Hi-Tech day hikers.
You are wrong on that one. There’s very real differences in shoes manufacturing at different price points. Walmart shoes will be either vinyl or the cheapest leather, the soles and lining will be man-made, and most of the construction will be glue. The shoes will be produced in mass quantities in China.
Manolos are hand-made in Italy (the labor cost between Italian craftsmen and Chinese factory workers is huge). The upper is either fine kid leather or something more exotic like real crocodile or snakeskin (or the sting ray skin shoes I just acquired). A “snakeskin” shoe from Target would be embossed cowhide, not real snake. All the construction is sewn and the soles are also quality leather. In addition, you’re also paying for the designer’s skills; most lower end shoes simply steal design details from more expensive shoe
Middle price point shoes like Steve Madden will use better materials than the Walmart shoe but still use glue in their construction and incorporate details inspired by designer shoes.
I’m not gonna deny that there are huge mark-ups on designer shoes but I’d be willing to bet the percentage mark-ups on a pair of Manolos is probably less than the mark-up on a pair of Crocs.
http://www.crocs.com/company/history.jsp
I’ve met one of the owners. He was out on his bike and wearing a Croc’s factory team kit. He was nice. And I think he is a millionaire. Unless he’s shown up on the Forbes 400 list of the richest Americans, I think it’s safe to say that he’s just a millionaire.
One thing to add to your calculus is the store’s mark up. You bought your shoe for $30. The store might have paid $20. The manufacturing costs are probably cheaper than $5. It’s a privately held company but you could call them up and ask.
You better do it. In the interests of science.
I know. I thought the same way until I tried them.
I bought a pair of Crocs a couple of years ago, before they were the rage, when there were only two color choices. (As far as I know. I am not that hip to cultural trends.) I wear them everywhere. Inside the house as a pair of slippers. Outside everyday in warm weather. When things cool off I wear them with socks.
They are finally starting to wear out. It is time for another pair. Oh yeah. I paid 30 bucks form them 2 years ago, the same price as today.
Howdy, neighbor! (I live near Foothills and Arapahoe–what part of town are you in?)
Your statement above is not true. Their NASDAQ ticker symbol is CROX.
My kids have been wearing them for 2 or 3 years. My son’s been through a couple of pairs, but he wears 'em like sneakers–plus his feet keep getting bigger (darn these children and their continual growth!). I couldn’t figure out why they liked them so much until I put a pair on. I’ve had 'em for about a year, and they show no signs of wearing out. Any shoes for which I paid under $50 that I am still wearing over a year later are, IMHO, an excellent value. Whatever the markup, they’re entitled to it for such an excellent product.
My 60-something year old mother, who lives on the East Coast, where the Croc-o-delirium has yet to fully penetrate, loves the hot pink pair we got her last winter. She is the fashion leader of their retirement community.
-Rick
Might be worth the cost if only they were edible.
Wife and kids have worn them for a few years - I can’t stand the things but they last longer than one might expect.
Update yourself, all Crocs are produced in China and not Canada these days. Factory was dissembled and shipped over maybe a year ago.
My niece went to school in Boulder with one of the Croc’s owners.
As I stated in my OP, I have no problem with Crocs as a product. I was more interested in some insight into the cost of their manufacture. Could I be so bold as to wager that they might cost less than one dollar to make? A kids pair of flip flops look like they have more components and more labour and you can find those for $2 is some discount stores. Congrats to the makes of Crocs for coming up with a simple design that works but might you still be ripping us off?
But if you think they’re worth $30, why are they ripping you off?
Look, they cost a LOT more than two dollars to get them to you. I challenge you to run a profitable shoe store; it’s hard. I challenge you to find a trucking company that will transport the product, reliably, for a low price; that’s hard too. The $30 purchase price does not all go back to the factory. What markup do you think is fair? 50%? 25%? 100%?
Things are worth what someone will pay for them and someone else will sell them for.
Last year my wife asked me if I’d wear a pair of Crocs.
“Only if you find them in my size (12) in pink,” was my reply.
:smack: (After 14 years, you’d think I’d be more careful in what I say to her.)
Actually, I love them. I wore them to a Bat Mitzvah last year with black dress pants, a black and white hounds-tooth jacket and a striped shirt in varying shades of pink. I was quite a hit with the 13-year-old girls.
I think that $30 is a fair price. I know a lot of people take a cut. I wonder how much they cost to manufacture compared to other types of shoes? If they are significantly cheaper to manufacturer than other shoes than maybe the $30 is a rip off.
What I am learning from this thread is that manufacturing costs may not be the major component of the price of a shoe. A lot of people need to make money for a product to make it to a store shelf.
Is it conceivable that the Crocs cost 25 cents to manufacture? Would you still thing that $30 was a fair price?
Are you getting a good value for your $30? If so, the manufacturing costs don’t really enter into it. Crocs cost $30 (and they cost that everywhere, I’ve never seen a discount) and people seem to like them. The competitors (Holey shoes?) run about the same price. People seem to like them and buy them, so I’d guess it’s a fair price.
Where did I say anything about Crocs being produced in Canada? 
I was talking in generalities about the difference between cheaper “walmart” type shoes and higher end shoes.
Just thought you might have known that Crocs were originally made in Canada.
I mentioned China because in your post you were comparing Crocs against some cheapo Walmart shoe made in China.