Footwear Finance for First Timers

March 29, 2018

VISION

We believe the best way to serve the design community is to be honest and transparent about every step of our journey, this includes our costing and we hope that joining us on our journey will help your own in the future.

An understanding of the end to end cost of footwear creation is crucial for your work in industry and producing your own run of footwear. In this blog we will talk about a couple of key factors we consider as we begin the project.

 

THE OVERVIEW

For this we reference a fantastic read by solereview, to which you can see the link at the bottom of this blog [1]. However for now, the below pic is the need to know-

 

 

This example works with the engine of nike behind it, a working model with volumes to drive much lower prices on production, operating and marketing expenses. When considering a startup footwear brand what you see here is that to make profit, there are a few need must haves-

  1. Minimise or eliminate your retailer margin - own retail is key and the internet is your friend

  2. Find new ways to market and manage overheads - a start up simply cannot throw their shoe on Kobe and watch it sell. We need to find smarter and more relevant consumer propositions

  3. Keep it lean - molds cost money and can be a deal breaker without the volume to subsidise it. So let's take a deeper dive-

 

BOTTOM UNITS

The biggest reason footwear is usually more expensive to develop and produce than other types of fashion is due to the costs of creating the Bottom Unit. This is a collective term for the “hard” parts of the shoe or the parts of the shoe that cannot be cut from a length of material. For sneakers, this is the outsole and midsole. Whether full scale production or just sampling, traditionally creating these parts of the shoe require expensive steel moulds, typically costing around $1k for a rubber outsole and up to $5k per injection moulded insole.

Where these costs alone can be huge, these figures will need to be multiplied for every size of Bottom Unit you intend to make. This doesn’t necessarily mean a new mould for every shoe size, as sizes can be grouped, but typically a full mens size run will require about 6 Bottom Unit sizes. For a basic running shoe, we estimate the mould fees alone to total at least $40k.

 

STOCK BOTTOM UNITS

If you (like us) don’t have that sort of cash to invest, there is a more affordable option - using an existing outsole. Choosing to use an existing outsole means that you only need to pay the part cost of producing each Bottom Unit on a mold that is owned by the supplier. Of course this means you don’t have the same freedom to design completely from scratch, but it helps to mitigate risks and makes footwear production affordable in the early stages. There are also plenty of advantages to capitalising on someones else’s experience of making good quality Bottom Units:

  • Quality: No need to worry about material use or bottom unit assembly.

  • Performance: Stock outsoles should already have been tried and tested, particularly important to consider when designing performance footwear.

  • Design: 3D modelling and mold design is a very technical process and requires a lot of skill to get right first time.

MINIMUM ORDERS

Aside from any mould and sampling fees, the final cost for footwear production is determined by the Part Cost x Quantity. Every supplier will have a minimum order quantity, which is the minimum amount pairs per color they need will make. It is worth finding out what material or component is driving the minimum order as often a small tweak to the materials or even colours can have an effect on the amount of pairs of shoes you will need to commit to. It will likely sit at around 500prs for most asian based manufacturers and the more you order the less you’ll pay per pair.

 

SUMMARY

So there we are, a rough indication into costs at the moment and more details to follow as we progress. Considering the above factors, expect an existing bottom unit and watch our online presence grow, these will be the key drivers for success. We will continue to update you in the weeks to come.

 

REFERENCES

1. https://www.solereview.com/what-does-it-cost-to-make-a-running-shoe/

 

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