After Nike's revealing of their newest shoe release, Lebron X Nike Plus, named after NBA superstar Lebron James, which is priced at a whopping $315, there has been a huge debate about how Nike prices their shoes. However, the fact that Nike charges premium prices on their shoes along with a lot of their apparel and accessories is nothing new. One of their most popular shoe products, The Air Jordans or Jordans, named after basketball icon Michael Jordan, has been selling in excess of $100 since the late 80's.
So the question arises, “How can Nike get away with charging up to $315 for a pair of shoes?”
Simply put, Nike can charge $315 for a pair of shoes because they can. And guess what, YOU, the consumer, play a huge role in how Nike prices their products.
How Consumers Affect Pricing Of Nike Products?
It all comes down to simple consumer economics. Nike has been charging over $100 for shoe products and apparel for many years. On the other hand, they have had customers actually paying over $100 for shoe products and apparel during the same period. As a result, Nike realizes that people are willing to pay over $100 for their products. Consequently, Nike will continue to test how much people are willing pay for their products.
Additionally, the only way that Nike will reduce the prices on their products is if consumers decide not to buy them. If enough people choose not to buy their products at those prices, then Nike, in order too make sales, will have to lower their prices.
It is unfortunate that many consumers do not take advantage of their power to affect pricing. Many consumers just accept how companies price their products with little resistance. As a result, you have companies charging higher and higher prices.
One can argue that consumers are just as much the blame for high prices as the corporations. It is not so much as corporate greed, but consumer tolerance.
Why Consumers Are Willing To Pay So Much For Nike Products?
Thanks to strategic marketing and branding, consumers perceive Nike products to be better. In addition to that, many Nike customers feel like wearing Nike products give them social status. Furthermore, consumers associate higher pricing with high quality. Ironically, if Nike products were priced significantly lower, consumers would think that the products are not authentic.
Nike Prices Make Good Business Sense
If I was running Nike I would charge as much as the market would allow and YOU would too.
To put this into perspective take a look at the points below:
You are presented with a job offer from Company A with a starting salary of $120K.
You are presented with a job offer from Company B with a starting salary of $95K.
Both jobs offer the same benefits package.
Both jobs have the same responsibilities.
All things considered you would accept the offer from Company A. Why? Because it makes good business sense. Why in the hell would you take the offer from Company B when you have someone else willing to pay you $20,000 more?
Special Note: Whether you want to believe it or not, you are a business. Your products are your skills and time. Furthermore, the price that you charge for your skills and time is based on how much people are willing to pay. In addition to that, it is in your best interest to charge as much as the market will bear or you might be losing out on money.
So What's The Solution To Overpriced Shoes?
As consumers we have a choice on whether we will buy a product or not. A company's job is to provide products and services that the people are willing to buy. Consequently, if an overwhelming amount of consumers decide that they are not willing to buy Nike shoes for over $100, then Nike will have to re-evaluate the pricing of their products. Essentially, what you have to do is boycott the company. I know it seems extreme, but in order to force a large company to make significant changes to their way of doing business, then you have to be extreme.