MicroBites #2: The Economics of Sneaker Culture: Why Jordans Cost So Much

Sneaker heads know the feeling—waiting in line (or online) for the latest Jordans, only to see them sell out in minutes. Then, you check resale sites, and the price is double or triple. What’s going on? Let’s dive into the economics of sneaker culture.

Scarcity Equals Value:

Brands like Nike use the idea of scarcity to their advantage. They will only release a certain amount of them to create hype and drive up the demand on that sneaker. When there are only 10,000 pairs of a particular design and millions of people want them, the value skyrockets. This concept is called scarcity, and it’s a key driver of high prices.

The Power of Branding:

Why don’t all sneakers sell for $500? Nike and other brands have spent decades building their reputations. When you buy Jordans, you’re not just buying a shoe, but you’re buying into a brand with cultural significance and style. Imagine some random upstart brand starts to sell shoes for $1,000 and they justify it by saying they are only selling 5 pairs. No one would buy their shoes because they have never heard of a brand. That’s called brand equity, and it’s why the swoosh logo adds extra dollars to the price tag.

The Resale Game:

Here’s where it gets even more interesting: the resale market. Teens and adults alike have turned sneaker reselling into a massive market in itself. They buy shoes at retail price (say $200) and sell them for much higher prices based on demand. This secondary market often sets the actual value of rare sneakers. For example, Nike’s infamous shoe, the Jordan 1s, had only cost $65 when they came out. However, through demand, resellers now sell them from anywhere between $150 to $450 dollars depending on the price because there are less of them in circulation and more people want them.

The next time you see a $1,000 pair of Jordans, remember, you’re looking at more than a shoe—you’re looking at an example of supply, demand, scarcity, and the power of branding in action.