THE BEST SHOE
COST & PRICE
What determinates the price of a shoe?
The cost of manufacturing a shoe is divided into four broad categories in the following proportions:
- Raw material: This accounts for approximately 40% of the manufacturing cost. The cost varies according to the quality and type of leather, laces, soles, lining and insoles.
- Labour: This accounts for approximately 35% of the manufacturing cost. The cost varies according to the production type. For instance, goodyear welting is almost three times more expensive than cementing. Similarly, a patina finish is applied by hand and triples the manufacturing time.
- Design and development: This accounts for approximately 15% of the manufacturing cost. This stage encompasses the design and development of collections, pattern making and grading, lasts, packaging, labels, etc.
- Factory: This accounts for approximately 10% of the manufacturing cost. It encompasses all factory costs such as the depreciation of machinery, maintenance, repairs, supplies, cleaning, insurance, leases, etc. The average cost of manufacturing a standard JMVC shoe is €120 and accounts for approximately 40% of the final retail price.
The margin between the final sales price in the store and the manufacturing cost must cover the company’s operating costs and expenses related to sales, distribution, marketing and communication. It must also generate minimum profits for the company, part of which are earmarked for social programmes and initiatives to boost economic activity in Valverde del Camino, in keeping with our corporate mission. The margin between the final sales price and the manufacturing cost is much wider for major luxury brands because it must cover much higher marketing and communication expenses.