The Adidas Yeezy Foam Runner is one of the most popular sneakers from Kanye West’s Yeezy brand. As a unique slip-on style made of algae-based foam, the Yeezy Foam Runner has developed a cult following among sneakerheads since its debut in 2020. But how much does it actually cost Adidas to produce a pair of these coveted kicks? Let’s break down the expenses involved in making Yeezy Foam Runners to get an idea of the shoemaking economics.
Materials
The upper of the Yeezy Foam Runner is made from EVA foam rather than any traditional sneaker materials like leather or textile. EVA (ethylene-vinyl acetate) is a dense, durable foam that can be injection molded into just about any shape. Adidas has not confirmed the exact formula used for the Yeezy Foam Runner, but it likely contains algae as a renewable resource along with EVA.
The cost of EVA foam varies based on density, thickness, and additives like algae. But generally, EVA foam costs between $0.80 and $2.00 per pound. With the Yeezy Foam Runner weighing around 0.5 lbs per shoe, the EVA material cost is around $0.40 to $1.00 per pair.
The other main component is the rubber outsole, which likely costs under $0.10 worth of rubber. So combined, the raw material cost for one pair of Yeezy Foam Runners is estimated at:
| EVA foam upper | $0.40 – $1.00 |
| Rubber outsole | $0.10 |
| Total material cost per pair | $0.50 – $1.10 |
Labor
The Yeezy Foam Runner is made with an injection molding process, where the EVA foam mixture is injected into a metal mold cavity and heated until it cures into the final shape. This automated process minimizes labor compared to hand-crafting sneakers.
The hourly wages of factory workers in Vietnam, where Yeezy Foam Runners are produced, averages around $2.50 per hour. The total labor time to inject mold the foam upper, attach the outsole, and package each pair is estimated at 5-10 minutes. At a rate of $2.50 per hour, the labor cost per pair is:
| Labor time per pair | 5-10 minutes |
| Hourly wage in Vietnam | $2.50 |
| Total labor cost per pair | $0.21 – $0.42 |
Manufacturing Overhead
In addition to the direct costs of materials and labor, the factory has overhead expenses for equipment, utilities, and other indirect costs. Industry experts estimate manufacturing overhead at 100% of labor costs.
So with the labor cost per pair at $0.21 to $0.42, the overhead cost would be an additional $0.21 to $0.42 per pair.
Total Cost to Make
Adding up the costs of materials, labor, and manufacturing overhead, the total production cost for each pair of Yeezy Foam Runners is around:
| Materials | $0.50 – $1.10 |
| Labor | $0.21 – $0.42 |
| Overhead | $0.21 – $0.42 |
| Total Cost per Pair | $0.92 – $1.94 |
So it costs Adidas somewhere between $0.92 and $1.94 to manufacture each pair of Yeezy Foam Runners.
Retail Price and Profit Margin
Adidas retails the Yeezy Foam Runner at a price of $80 per pair. Compared to the production costs, this translates into a profit margin of:
| Retail Price | $80 |
| Total Cost per Pair | $0.92 – $1.94 |
| Profit per Pair | $78 – $79 |
| Profit Margin | 97% – 99% |
So for every pair of $80 Yeezy Foam Runners sold, Adidas earns a profit between $78 and $79, which represents a profit margin of 97% to 99%. This very high margin demonstrates the economic value of Kanye West’s Yeezy brand and hypebeast demand allowing the sneakers to be priced well above production costs.
Scale of Production
To estimate Adidas’ total profit on Yeezy Foam Runners, we need to consider the scale of production. Although Yeezy supply is typically constrained, the brand is ramping up capacity. Most Yeezy releases now number in the hundreds of thousands of pairs.
If we assume a production volume of 500,000 pairs of Yeezy Foam Runners per year:
| Number of pairs produced annually | 500,000 |
| Profit per pair | $78 – $79 |
| Annual profit from Yeezy Foam Runner | $39 million – $39.5 million |
At this scale, Yeezy Foam Runners could generate around $39 million to $39.5 million in annual profit for Adidas at the current retail price. This demonstrates the lucrative nature of the cult hypebeast market.
Pricing Factors
Several factors allow Adidas to price the Yeezy Foam Runner so far above production costs:
Brand Cachet
Kanye West’s Yeezy brand has become one of the most desirable in the world, allowing premium pricing powered by the brand’s cachet.
Limited Supply
Adidas intentionally constrains Yeezy supply below demand, which generates scarcity and hype leading to inflated resale prices.
Hypebeast Demand
The sneaker collector community and hypebeasts are willing to pay far above retail for limited Yeezy models.
Innovative Design
The unique algae foam composition and slip-on shape create differentiation from standard sneakers.
Cost Reduction Potential
Adidas may have opportunities to reduce production costs on the Yeezy Foam Runner, which would further increase profit margins. Potential cost reductions could include:
Economies of Scale
Ramping up production volumes would lower costs through economies of scale. Fixed costs would be spread across more units.
Cheaper Materials
Reformulating the EVA foam mix could use less expensive alternatives without reducing quality.
Automation
More automation in assembly processes like attaching soles could reduce labor costs.
Relocating Production
Moving manufacturing to lower cost countries like Indonesia or India could significantly reduce labor expenses.
Conclusion
The retail price of the Yeezy Foam Runner far exceeds the costs of materials and production, allowing Adidas to reap huge profit margins from Kanye West’s immensely popular Yeezy brand. Production expenses total around $1 per pair, while retail price is $80. This gap leaves profits of $78 to $79 per pair, or 97% to 99% margins. With hypebeast demand and brilliant viral marketing, Adidas looks poised to sell Yeezy Foam Runners for years to come as an incredibly lucrative sneaker cash cow.