Few businesses want you to know the detail of their costs.
However, at Atheist Shoes, we don't see any advantage in keeping our costs secret. We don't live or die by what our competitors do. And our cost structures are so super different to most shoe companies that it doesn't matter if we're open about them.
In fact, it's probably good for us to be transparent. Once you understand where your money goes, you'll probably feel even cooler for supporting us!
So where does the money you pay for a pair of Atheist Shoes go?
In the images and bullets below, we compare the cost breakdown of a $200 Atheist Shoe, with publicly available information on the breakdown of a $100 Nike Sneaker.
Atheist Breakdown of Costs for a $200 shoe
- $67 - Production. The cost of developing and making, by hand, one pair of ATHEIST Shoes. Most of this goes to Paulo, Hugo and their team of artisanal shoemakers. The remainder is spent on leather & materials. We only use the very best leather, sourced in Europe, from cows raised in Germany, The Netherlands and Portugal.
- $48 - Salaries & health insurance for our accordion-like team of 3 to 6 people.
- $28 - Rent (incl. amenities & insurance). Our warehouse & menagerie in Berlin and pop-up spaces in new cities.
- $42.5 - Shipping, VAT & Duty - if you live in the EU, your shipping costs less but your tax more. If you live outside of Europe, your shipping costs a good bit more but you don't pay any European taxes. Fun fact: our shipping times to the USA are often faster than to the UK, it sometimes takes just 2 days!
- $3.4 - Lawyers - we kid you not! Who'd have thunk a small startup like ours would spend more on lawyers than it makes in profit? But we have some hairy stories to tell... perhaps in a future episode of April Truths!
- $3.3 - Net Profit - ok, so we're basing this on our most successful year so far, but we're optimistic we'll only become more profitable with time.
- $1.1 - Tax. We're happy to do our bit and we'll be happy to pay more when our profits grow!
- $6.6 - Travel - it helps to be in Portugal as much as possible, and the USA is our largest market, so it's important to be there too.
- $0 - Retailer Middlemen - this is the biggy. Nike shares 50% of the price a shoe with retailers, whilst we don't use retailers at all. The good news is, it means we don't have to charge $400 for our shoes (thats certainly the price the quality merits) but the bad news is we don't have retailers helping us to reach new customers.
- $0 - Marketing. Our aim from day 1 was to build a product so good it would sell itself. And it seems to be working so far.
Nike Breakdown - a $100 shoe*
- $25 - Production, development & materials.
- $50 - Retail Mark-up
- $3.5 - Freight & Duties.
- $4.5 - Net Profit
- $2 - Tax
- $15 - Marketing, Salaries & Admin (for visualisation purposes we've assumed an even split, with $7.5 on marketing, and $7.5 on admin and salaries).
* This is all courtesy of a report in the Portland Business Journal, so it may not be spot on, and we've guesstimated the precise split between marketing and admin / salaries.
- Our shoes cost 3x more to produce than Nike's.
- A HUGE thing is that we don't use retailer middle men! We'd have to double our retailer prices if we did.
- We spend zilch on marketing. But that might change with growth - if we were double the size, we wouldn't need double the team, so that would free up money to invest in spreading the word.
- Even by charging twice as much and selling the shoes ourselves, we still don't make quite the same profit as Nike does. That might change with growth, however.
- We've spent more on admin and legal stuff than we ever imagined we'd have to. More on that in a future episode!
Anyhow, that was a first glimpse behind the curtain at Atheist Shoes. We hope you enjoyed this does of April Truth... more truth soon!