NIKE Pricing Spineometer: 2 of 5 Vertebrae

NIKE, an athletic footwear, apparel, and equipment company selling NIKE, Jordan, and Converse brands, had a negative FY 2025. Revenue fell 9.8% to $46.3 billion, and earnings before interest and taxes fell 41% to $3.7 billion over last year.

A review of NIKE’s 26 June 2025 earnings call and associated annual report provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

FY 2025 has not been kind to NIKE. They report lowering the brand average selling price by 1.8% over FY 2024. While I do not have the facts to state this was a good or bad result, it indicates NIKE has faced some headwinds in FY 2025 ending in June 2025, and that pricing is highly important to performance.

Elliott Hill, CEO of NIKE, reported that he has recently reduced the number of direct reports from 15 to 11. Management thinkers often suggest rightsizing the number of direct reports to a CEO based on that CEO. Ranjay Gulati of Harvard Business School suggests a baseline range of 12 to 15, followed by “If you’re going to deviate from that, I need to know why.” Mr. Hill has chosen just below this range, which to differ with would be unnecessary quibbling. We would not expect a pricing team to be a direct report to the CEO, but research has repeatedly demonstrated that a tight relationship, or one in which the top pricing executive speaks frequently to the CEO, leads to greater financial performance.

Matthew Friend, CFO of NIKE, reports implementing a “surgical price increase in the United States with phase implementation beginning in Fall ’25” in response to tariffs’ impacts on cost of goods sold. This indicates a somewhat timely effort to increase prices in relation to inflation.

Mr. Friend also reports that their “Win Now” actions are repositioning NIKE as a full-price brand in a healthy market. This implies that NIKE has an orientation towards value-based pricing wherein the price captured is proportionate to the benefits delivered to customers.

Three key C-Suite messages uncovered in this now three-year Pricing Spineometer series are that leading executives seek (1) value-based pricing, (2) executed with discipline and predictability, and (3) managed with or ahead of inflation. To deliver on this goal, companies need a pricing team to coordinate pricing decisions across sales, marketing, finance, supply chain, operations, and legal teams.

Pricing is the glue that holds pricing discipline across the organization.

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 77,800 employees at NIKE, industry benchmarks would suggest 92 to 460 professionals would manage pricing decisions daily. NIKE has similar pricing requirements to many other businesses, but due to many factors listed below, we would recommend the pricing team at the upper end of this industry benchmark, in the range of 280 to 460.

1. NIKE reports having significant investments in Research, Design, and Development. New product development (NPD) requires pricing research to support product development at a minimum of two specific phases in the cycle. Early in the NPD cycle, price estimation efforts are necessary for building the business case for the NPD effort. Late in the NPD cycle, but well before engaging customers, pricing research must define more clearly the go-to-market price. For significant revenue offerings, conjoint analysis would be warranted.
2. NIKE has a diverse customer base with no customers accounting for more than 10% of revenue. 58% of revenue is derived from Wholesale customers, and 42% from Direct customers. For wholesale customers, NIKE salespeople would benefit from net price variance guidance, which relies on AI to predict the good, expected, and poor price outcomes from customer negotiations. These negotiations would also benefit from a product mix and price analysis that identifies customers as Stars, Bargainers, Question Marks, or Problems to specify desired negotiation goals and walk-away outcomes.
3. Continuing the role of pricing with business customers, pricing can improve the structure of discounts and rebates to deliver greater mutually beneficial outcomes, such as improving the mix of products sold or logistics costs across the channel, which can improve both price and revenue capture.
4. Across the customer base, controls over promotions would benefit from studies of not just Customer Acquisition Costs and Return on Investment, but also Breakeven Incremental Sales per Redemption or similar Subsidized Sales analysis. Marketing can use the results of this analysis to improve their promotional strategy and results in promotional spending.
5. NIKE reports significant expenditures on marketing and branding. Typical brand elasticity of demand is near 2%, implying a 50% increase in brand spending would be needed to drive a 10% increase in revenue. Brand marketing also has an impact on pricing power. Typically, greater brand marketing reduces the need for price promotions and increases pricing power, or the ability to raise prices within a range without the loss of market share.
6. Nearly all footwear and apparel products are manufactured outside the United States by independent contract manufacturers. Tariff volatility can quickly impact product profitability on products whose sourcing cannot be changed in a short time frame. If tariffs significantly impact profitability, price changes are the quickest business remedy. To enable price agility, such as changing prices every quarter rather than once a year and coordinating decisions with salespeople and customers, NIKE would require a stronger-than-normal pricing capability. Strategically, many small price changes in uncertain economic environments are better than one large price change, as small and well-announced price changes signal an industry price change and enable better insights into the impact of a price change in response to a cost change.
7. NIKE is a global company. North America is 44% of revenue, Europe, Middle East & Africa (EMEA) is 27%, Greater China is 15%, and Asia Pacific & Latin America (APLA) is 14%. Because competition, customers, and market practices vary in different geographies, best practices would suggest some pricing capability to be collocated with significant market presences.
8. NIKE’s products are seasonal. With seasonal offerings, it is common for firms to sell offerings at full price early in their season and at a liquidation or markdown price late in their season. To minimize the need for product markdowns at greatly reduced prices, pricing should also work with supply chain and operations to manage purchase quantities, thus preventing a nasty cycle of increasing purchases to meet a revenue target, which is then missed by increasing markdown requirements.
9. As a producer of consumer goods, NIKE knows the price elasticity of demand for different products, and possibly for different brands and industries. Knowing when the price elasticity of demand is useful for addressing a pricing question and when it is not, and which price elasticity of demand is relevant for which decision and what time frame, is the domain of a pricing expert, not an analyst.
10. Macroeconomic shocks also impact sales quantity and price capture. To manage economic shocks, which are always occurring somewhere in the world and in places where NIKE operates, Applied Economists would be useful. For instance, consider a negative supply-side shock and its impact on price and quantity sold. NIKE executives should anticipate that a negative supply-side shock will reduce quantity sold and increase prices. Telling sales and marketing managers that NIKE is raising prices and expecting to sell fewer items is a hard story to tell. Applied economists working with pricing can help coordinate these changes and get the team behind the strategy.
11. Other challenges should also be addressed with pricing expertise. For instance, new digital strategies benefit from price structure expertise to move beyond unit pricing into different business models. Similarly, new competitive threats, or the reduction of a competitive threat, would also require a well-considered and informed price response.

OBSERVED PRICING CAPABILITY

Research into the investment by NIKE in pricing yielded underwhelming results.

1. The pricing team size was well below industry benchmark, much less the narrower suggestion identified by considering the Value-Based Pricing Framework as it relates to NIKE.
2. A few pricing managers and one pricing and analytics director were identified. Neither analysts nor a Vice President of pricing could be identified.
3. Pricing professionals were identified in most of the major market areas. My research methodology cannot reliably ascertain the presence of pricing professionals in China.
4. Responsibilities appeared to be focused on coordination and giving recommendations. Most decisions in pricing appear to be made by professionals in analytics, merchandising, competitive insights, finance, sales, and other areas. This leaves many potential coordination gaps in pricing decision-making and likely leads to many challenging executive conversations given the disparity in motivations and perceptions across these different functions.

Given the importance and capability of pricing at NIKE, as indicated in financial reports, management statements, and our pricing team research, we have come to the following conclusion as of October 2025.

NIKE Pricing Spineometer: 2 out of 5 Vertebrae. C-Suite executives are aware of the importance of value-based pricing and good price management. Many good pricing decisions are being made. But a much greater investment in a reliable pricing capability to ensure rational and well-informed pricing decisions and discipline is needed.

NKE (NIKE, Inc.) rose from 60 the day prior to their earnings call to 76 one week later. FY 2025 revenue of $46.3 billion with an 8.0% operating margin and a P/E ratio near 35.

For FY 2025, a 1% improvement in price would yield a 12.5% improvement in operating profits holding all else constant at NIKE.