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Why don't the manufacturers raise the price to meet demand?

have_faith 8y ago
If you raise prices until only the amount of people left wiling to buy matches the limited supply of the shoes then sure you've married supply and demand in a textbook sense, but you've removed the fever-pitch generated by everyone clamouring for the shoes at a price point just attainable to a larger audience that will rarely buy them. The pandemonium caused is a driver of the demand.
- moate 8y ago
  If you're running a shoe company, the hype helps build brand support as well. Have a wide audience means that people are interested and engaged in the brand, because hey you could get a lotto ticket pair and make yourself a bunch of money. Sneaker culture is so strongly tied to hip hop culture, which has a really strong DIY-attitude to it, so making it hyper-elitist from the outset would short circuit the whole thing. You're totally right, that part of the value of these shoes to the company is the commotion they create in the market as everyone scrambles and pays attention. Then if someone can't get the limiteds, they'll settle for the dope looking regular release (which is still sold at insane margins for the company).
bufferoverflow 8y ago
Or even better, why not auction them? This way you get a perfect price for each pair.
- lbotos 8y ago
  Because if companies started auctioning off products (limited or not) people would get up in arms because the company is "completely profit seeking". https://solecollector.com/news/2014/12/how-much-it-costs-nike-to-make-a-100-shoe https://solecollector.com/news/2014/12/how-much-it-costs-nik... For Nike in 2014, it was $28 a pair to make. They are getting plenty of markup. They'd also lose brand good will because people would stop trying to buy if the auctions prices were out of grasp.
pavel_lishin 8y ago
And why aren't these damn cows perfectly spherical?
kfichter 8y ago
A few reasons. People don’t like paying $600 for a pair of shoes because nice ones are usually $100-200. Feels better to get ripped off by someone on the internet than by Nike. More importantly, the fast sellout times create hype, which just further drive the market. These companies will make more money in the long-term because people will keep coming back to get one of these shoes that “no one else has.” Trick is that the companies do eventually flood the market

If you raise prices until only the amount of people left wiling to buy matches the limited supply of the shoes then sure you've married supply and demand in a textbook sense, but you've removed the fever-pitch generated by everyone clamouring for the shoes at a price point just attainable to a larger audience that will rarely buy them. The pandemonium caused is a driver of the demand.

moate 8y ago
If you're running a shoe company, the hype helps build brand support as well. Have a wide audience means that people are interested and engaged in the brand, because hey you could get a lotto ticket pair and make yourself a bunch of money. Sneaker culture is so strongly tied to hip hop culture, which has a really strong DIY-attitude to it, so making it hyper-elitist from the outset would short circuit the whole thing. You're totally right, that part of the value of these shoes to the company is the commotion they create in the market as everyone scrambles and pays attention. Then if someone can't get the limiteds, they'll settle for the dope looking regular release (which is still sold at insane margins for the company).

bufferoverflow 8y ago

Or even better, why not auction them? This way you get a perfect price for each pair.

lbotos 8y ago
Because if companies started auctioning off products (limited or not) people would get up in arms because the company is "completely profit seeking". https://solecollector.com/news/2014/12/how-much-it-costs-nike-to-make-a-100-shoe https://solecollector.com/news/2014/12/how-much-it-costs-nik... For Nike in 2014, it was $28 a pair to make. They are getting plenty of markup. They'd also lose brand good will because people would stop trying to buy if the auctions prices were out of grasp.

pavel_lishin 8y ago

And why aren't these damn cows perfectly spherical?

kfichter 8y ago

A few reasons. People don’t like paying $600 for a pair of shoes because nice ones are usually $100-200. Feels better to get ripped off by someone on the internet than by Nike. More importantly, the fast sellout times create hype, which just further drive the market. These companies will make more money in the long-term because people will keep coming back to get one of these shoes that “no one else has.” Trick is that the companies do eventually flood the market