- The industrial cost of a product is just part of the story.
- A product is the result of research and development, marketing, and logistics—all of which create its intangible but real value.
- To truly understand a price, you have to look at the whole story—not just the price tag.
In a time of trade wars and viral social media debates, one topic always seems to come back—like a summer hit: the real cost of things. If there’s a silver lining to all the talk about tariffs, global trade, and globalization, it’s that it can raise awareness and understanding around issues that affect us all. After all, we’re all consumers, for better or worse.
You’ve probably seen those videos too—the ones breaking down the cost of making a luxury-brand handbag that later sells for ten or twenty times more. It’s no surprise they spark outrage: in purely material terms, it’s true—the production cost of many high-priced products is much lower. But, as is often the case, the reality is a bit more complex. It’s part of a much bigger story that we’d like to explore—not to take sides, but to give you more context so you can better understand how things really work.
To get the full picture, we have to take a step back. And then a few steps forward.
But let’s start from the beginning: a shoe doesn’t begin its life on the production line. It starts long before that.
It’s not just a shoe—it’s a project
The story begins well before your next pair of running shoes ends up on a shelf or a website, long before it’s packed in a box, shipped, cleared through customs, and displayed. A shoe is born in a brand’s labs, in their design centers, among product and material specialists and at the desks of designers. That’s where ideas are tested, designs are drafted, prototypes are made. Mistakes are made. And tried again.
This is the realm of R&D, and in the world of sportswear, it’s not a luxury—it’s the heart of everything. Want to run faster? You need lighter, more responsive foam. Let’s figure out how to make it. Need to shave off weight from the shoe? Try more breathable uppers—maybe lighter ones too. Behind these ideas, tests, and failures lies a serious investment. Time, technology, patents. And money—lots of money.
And all of that feeds into the number you’ll later see on the price tag.
Cost, price, and value are not the same thing
Allow us a quick detour—one that’s necessary to clarify some key concepts that help determine a product’s final price. If you’re already familiar with the difference between cost, price, and value, feel free to skip ahead. If not, hang with us. We’ll keep it short.
Industrial cost
This is the amount it takes to physically produce something and includes materials, labor, and indirect costs. Importantly, it doesn’t include overhead like marketing, facility rent, salaries, and so on.
Price
The retail price is what you see on the tag in stores or online. Since it includes things like marketing, transportation, taxes, and retailer margins, it’s inevitably higher than the production cost.
Value
Value is a more abstract concept—you don’t calculate it, you feel it. And sometimes, it’s worth more than anything else. Here’s an example: a €300 pair of shoes may seem wildly expensive to someone earning €1,200 a month—but cheap to someone making 10 or 100 times that. It’s all relative, right?
Still, value is hard to define because it varies from person to person and situation to situation. So for simplicity, we’ll focus on two kinds: economic value and perceived value.
Economic value is what you’re willing to pay to get something. That’s why it doesn’t live in the product—it lives in the eye of the beholder.
It’s the same reason a Picasso is worth millions, even though it’s just canvas and paint. Or why a Birkin bag can cost more than a motorcycle. Same story: you’re not buying an object, you’re buying how that object makes you feel. The story it tells—and how it makes you feel part of that story.
Perceived value is the worth you personally assign to a good or service. For instance, a rare Pokémon card might be priceless to a collector—but meaningless to you, if you’re not into Pokémon. Remember perceived value—it’s a central concept in marketing that we’ll revisit later.
Let’s also add a third kind of value: environmental/social value. This is the positive (or negative) impact a product has on society and the planet. It’s not always easy—or even possible—to measure this in money, since it involves many overlapping, fuzzy areas. But keep it in mind anyway.
So, when you see that a €180 shoe costs €30 to make, you might think you’re paying six times more than it’s worth. But as we’ve seen, you’re paying for its economic value, its perceived value, and sometimes its environmental value. You’re not just paying for a product—you’re paying for everything that made that product possible, that brought it to you, and made you want to run in it. You’re paying for how it makes you feel.
And don’t forget: we’re talking about non-essential goods here. Running shoes aren’t food, housing, or water. You can live without them—but you can’t live without eating.
In short:
Cost is what it takes to physically make something—materials, labor, energy, a production facility.
Price is what you decide to sell it for (so you can make a profit, as we’ll see).
Value is what the buyer thinks it’s worth—or the amount of wealth they’re willing to give up to get it.
From raw materials to your feet: every step adds to the story
So far, we’ve seen that the story of our shoe begins long before it’s made. And it continues well beyond that point.
You need raw materials: EVA or PEBAX foams, carbon plates, technical mesh—often sourced from specialized suppliers.
You have to manufacture it—typically in countries like Vietnam, Indonesia, or China, where labor costs are lower. But you still need machines, facilities, and quality control.
Then come shipping and customs—international transport, insurance, import duties.
There’s logistics—warehouses, distribution, sorting centers.
And finally: retail. Physical stores or online platforms, with their own fixed costs, staff, marketing, returns, after-sales support, customer service.
Each step costs money. And each step increases the product’s perceived value.
Enter the brand
So far, we’ve talked about a generic “Shoe X”: no brand, mid-to-high tech—a kind of neutral case study. But now let’s talk about the brand—the invisible but powerful main character. When you buy a branded shoe, you’re not just buying a shoe. You’re buying an identity, a promise, a story.
As marketing professor and author Scott Galloway says, “A brand is a promise: of reliability and of value.”
When you buy a “branded” product, you’re essentially buying its name, its quality, its values—and your place among the people who share and display those values.
That’s brand value. It’s what makes you say, “I’ll spend €30 more because this is the shoe that makes me feel faster.”
It’s called brand equity—and it’s no joke. It takes massive investments in sponsorships, epic ads, iconic athletes. It takes storytelling that stirs emotion, infused into every product. And above all, it takes time. Credibility only comes through carefully built relationships between brand and consumer.
And yes, all of that ends up in the price.
But here’s a question: how much less would you be willing to pay for the same shoe—without the logo?
Luxury teaches us (without running)
To take this further, let’s push the idea to its limits and look at the luxury world. Here, we’re not talking about a product that costs six times its industrial cost—we’re talking ten, even twenty times. And that’s not even factoring in how hard it is to actually get one (thanks in part to intentionally limited supply—a tactic known as “engineered scarcity”). Take the Hermès Birkin bag: retail price over €10,000; estimated production cost around €1,200. Too much?
Actually, that gap is filled with years of storytelling, desire, and exclusivity. No one buys a Birkin for the leather. They buy what it represents.
And in our own way, we do the same thing with running shoes. Not to the same extreme—but using the same logic.
The end? Nope, just the beginning
So what’s the real cost of a running shoe? It’s a puzzle. The production cost is just one piece. But there are many others—often invisible, but essential. Understanding them is the first step toward being a more informed consumer—and maybe even a more mindful runner.
That’s why we’re not wrapping up by telling you the exact cost of producing a shoe—even if we’ve dropped a few hints along the way.
Instead, we want to leave you with this: figuring out that number is more complicated than it seems. Not just because of material value—but because of perception, psychology, and the reason why sometimes you spend more than you planned… and don’t regret it.
But that’s a story for next time.