LEGO is one of the most popular toys of all time. Chances are you had a set as a kid and maybe even have a few bricks laying around as an adult. It’s a simple system that offers an almost unlimited number of possibilities, but there is a downside: LEGO is quite expensive.
That popularity hasn’t waned, even though LEGO has a higher price tag than similar systems like Mattel’s Mega Bloks. On average, retailers around the world sell seven LEGO sets every second, and they sell enough bricks a year to circumnavigate the world five times.
There’s also some logic behind the price tag. While part of that is profit margin, there’s more to a LEGO brick than you realize. Factors related to the stone itself, the environment, and the characters that wander around in your creations all come into play.
Let’s take an in-depth look at why your LEGO bricks can cost mega bucks.
Big brands have a premium
As we mentioned before, LEGO is one of the most popular toys out there and the most popular construction toy – a category that includes but is not limited to LEGO clones. Being popular and having a good reputation allows companies to charge a premium. Just as a Nike or Levi’s logo can make a piece of clothing more expensive, the word LEGO stamped on a plastic brick will drive up the price.
The LEGO brand has even grown beyond the brick. Both video games and films featuring original LEGO characters or established characters with a LEGO twist have performed well on the charts and at the box office in recent years, as have collaborations with fashion brands. While the storylines and gameplay features offered were interesting enough on their own, the venture demonstrates the appeal of the LEGO brand as a whole.
Quality has its price
LEGO manufactures its products from different types of plastic. The company makes standard bricks from acrylonitrile butadiene styrene (ABS) – a hard, durable plastic well suited to the brick’s needs. ABS produces a durable toy, and the plastic works with the injection molding process LEGO uses to make these bricks.
Other materials used are high impact polystyrene for the base plates, polypropylene for the accessories and thermoplastic polyester for the transparent parts. The company lists 12 types of plastic currently used in its range.
The machines that make the bricks have tolerances of just 10 microns (0.01m). These tight tolerances ensure a snug fit and a stable connection between two stones. Although other brands design their products to “fit” LEGO sets, they probably won’t fit as well due to the tighter tolerances and high standards of LEGO sets.
Also, the plastic used may not be of the same quality. Growing up I had LEGO sets along with alternative sets from other manufacturers. I distinctly remember that the plastic on the off-brand sets looked and felt cheaper than that of the actual LEGO bricks.
The stones are still developing
Research costs money and LEGO is constantly developing new products. LEGO releases an average of over 850 sets a year. According to the company’s 2020 Annual Report, new products account for 55% of the portfolio each year. Each of these products required research, testing and, in some cases, the development of specific machine parts before it could reach the market. The report also states that LEGO spends over $138 million a year on research and development.
The company isn’t just focused on developing new sets; LEGO is even redesigning the bricks themselves. LEGO has developed an environmental focus after acknowledging that a high percentage of the billions of LEGO bricks in existence will still be around hundreds of years from now. Since then, the company has developed bricks made from sustainable materials like sugar cane and bricks made from recycled plastic bottles, and has committed to phasing out single-use plastic packaging by 2025.
LEGO has also pledged to invest over $400 million over three years in its Learning Through Play initiative to reduce carbon emissions and replace plastic packaging paper .
Licensing drives up costs
If your urge to build things overlaps with your passion for something like Star Wars or Harry Potter, chances are you’ve stumbled upon a licensed LEGO set at some point. The Danish toy company has acquired the rights to produce sets based on several film and TV franchises over the years and these rights do not come free.
The exact numbers for each license agreement vary, but likely include a flat fee and a royalty for each licensed set sold. In 2020, LEGO spent around $500 million on “license and royalties”. LEGO doesn’t take these expenses head on; You pass the cost on to the consumer.
It’s cheaper than before
Although parts of the company’s main “System” line appear to cost a small fortune, they cost a fraction of their 1970s prices. Other parts, like LEGO minifigs, cost about half what they cost in the 1960s, despite a price spike in recent years.
More expensive sets are available, some costing several hundred dollars. However, these sets contain thousands of individual parts. The LEGO Millennium Falcon set is one of the pricier on the market, costing just under $800 new. The set contains a whopping 7541 pieces, so you’re paying 10.6 cents a piece despite this being an intricately designed and licensed set. While relatively new, the huge, expensive sets make up just a small fraction of the 850+ LEGO releases each year. The average price of a set has also fallen over time.
So here we are. There’s a lot packed into a LEGO brick, from materials to brand licensing. The manufacturers have nevertheless managed to lower the price despite the massive increase in variety, to acquire all kinds of licenses, to further develop their brands and to maintain quality standards. They also seem to be doing their part to improve the environment and the lives of disadvantaged people.
Yes, LEGO is expensive, but when you look at where the money is going, it’s worth it.
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