The ever-popular LEGO bricks have been around since the 1940s, dominating the market in creative toy construction.
Even though they are expensive, they continue to be highly sought by both adults and children.
The licensing to use mainstream icons and pop-cultural themes, as well as a high resale value and retailer costs are the main reasons LEGOs are expensive. Precision engineering, strict manufacturing processes, along with material quality, research, and product testing also drive costs up. LEGO also makes strides in using environmentally-sustainable practices as well as protecting its brand from the competition.
Let’s explore these interesting factors in greater detail.
Topics
1. Cultural Icons
In 1932, LEGO started as a wooden toy company created by Ole Kirk Christiansen in Holland. The plastic bricks that are known today were developed in the 1940s.
Over the years, the LEGO Company has incorporated cultural icons and themes into its products.
These include dinosaurs, trains, LEGO City, Batman, Star Wars, Minecraft, and more. By targeting American’s interests, the sales are going to go up.
Kids and adults purchase LEGO sets and kits if they are a fan of the icon or theme, leading to successful sales.
2. Licensing Agreements
The LEGO company must have licensing permission to create and sell sets around popular branded theme sets, such as Disney or Harry Potter.
These exclusive rights through toy licensing agreements are contracts that share the profits between the companies.
As a result, the costs will be higher so that all involved make a profit off of the sales.
3. Number Of LEGO Pieces
On average, a single LEGO piece costs 10.4 cents. As a result, sets with more pieces are going to cost more.
However, other factors, such as theme, popularity, size, and complicated design of individual LEGO pieces increase the overall cost.
Sometimes, the more pieces, the lower the cost is per piece. It will vary greatly.
You can quickly determine the cost per LEGO in a set by dividing the cost by the total number of pieces. Please note, that these prices are approximate since they do not reflect discounts, retailer location, or current market trends.
For example:
| Set/Kit | Number of Pieces | Cost | Cost per Piece |
|---|---|---|---|
| LEGO Creator 3-in-1 Sports Car Toy Building Kit | 134 | $10 | $0.07 |
| LEGO Creator Fish Tank Exclusive 3-in-1 Building Set | 352 | $48 | $0.14 |
| LEGO Classic Around The World Building Kit | 950 | $60 | $0.06 |
| LEGO Star Wars Snow-Speeder Building Kit | 1,703 | $670 | $0.39 |
4. Design: Shapes And Colors Of Pieces
Basic LEGO building blocks are generally boxy shapes. However, when other shapes, colors, and pieces are added in, different molds and machines are needed to produce them.
For example, a tractor set will have rounded rubber-like wheels, a dinosaur set has sharp pointed teeth, and a flower kit has rounded pieces to make the petals.
Colors such as chrome black, bluish-gray, orange, or golden are not as common and can cost more to produce. There is even a rare 14-karat gold Boba Fett figurine valued at $11,495.95 in 2010.
The equipment needed to make specialty LEGO pieces adds to the overall cost.
5. Engineering Precision
LEGO bricks are designed to interchangeably stack with other LEGOs regardless of when they were manufactured. A LEGO kit purchased decades ago will work with today’s LEGO sets.
The precision of product creation requires monitoring to ensure that molds and machines are producing consistently accurate pieces.
LEGO-producing machines have a precision tolerance as small as 0.002 millimeters. The precision of the machines is so good, that approximately only 18 pieces out of 1 million bricks are defective.
These defective bricks are then recycled to be reformed into properly formed ones.
It costs money to maintain this high level of accuracy.
6. Quality
In addition to LEGO’s engineering precision, LEGO bricks are made of high-quality materials that both clutch together and release well.
This results in bricks that have the following characteristics:
- Do not fade or melt
- Thermoplastic materials for strength and resilience
- Durable for generations
- Precision pieces for interconnectivity
The cost of crude materials from the countries they are sourced from as well as production supplies can change with the market demand and supply.
As a result, these are reflected in overall costs.
7. Environmental Initiatives
LEGO is investing up to $400 million to increase their sustainability efforts.
Even though LEGOs do not melt or give off hazardous gasses, the company is committed to replacing current thermoplastics with environmentally-friendly options by 2030. Also, their packaging will reflect more biodegradable options.
Additionally, LEGO has partnered with the World Wildlife Fund (WWF) to reduce carbon emissions in operations for manufacturing and supply chain areas.
The cost to transition to different manufacturing and sustainability practices costs considerable money.
8. Global Manufacturing And Packaging
LEGOs are not manufactured in the United States. Instead, they are produced globally in places such as Denmark, Hungary, Mexico, and China.
LEGO also has facilities that work on brick decorations and packaging in places such as Denmark, Mexico, Hungary, and the Czech Republic.
Quality control ensures that every packaged box of LEGOs has exactly the right amount and kinds of pieces.
The bricks go through quality control measures to ensure that they are an optimal product, regardless of where they are manufactured.
The manufacturing process requires labor and special equipment and machines that need maintenance.
Applicable customs, duties, and taxes are also added to the overall cost as the pieces are shipped out for sale.
9. Resale Value
Sets that are discontinued or rare will come with a higher cost. When more people are choosing to collect or have a certain kit, they are willing to pay more to have it.
When the sets include the original packaging, the resale is even higher. LEGOs have been shown to increase in value over time as well.
For example, a retired LEGO Brick Bank from 2016, sold at retail for $169.99. Today, its value is $535.65.
Due to LEGO’s precision and high quality, purchasing a used kit will have a like-new feel.
10. Retailer Costs
LEGO sells its products to retailers for a direct profit. Then, they suggest what the retailers should sell them for.
Pricing from retailers will cost more depending on their location. This leads to price differences for sets, which has consumers shopping around for the best deal.
To generate revenue, both the LEGO company and the retailers must make a profit. This can add up exponentially.
11. Play Benefits
Adults and children alike build with LEGOs, making them a timeless toy. Adults not only collect the sets, but they can be stress relievers as well.
Children also benefit from LEGO play. These benefits may include:
- Motor skill development
- Teamwork to develop cooperation and collaboration social skills
- Building of confidence
- Developing persistence
- Fostering imagination and experimentation
- STEM-based sets for science, computer programming, and engineering
If parents see that a toy will benefit their children’s overall health, they may be willing to pay more.
12. Research
LEGO releases hundreds of sets each year. All these products require research before manufacturing and unveiling.
New products will reflect current consumer trends and interests through focus groups. The time in developing new products requires research and testing, with the company spending over $140 million yearly on this task.
All of the workers to run research and develop products receive salaries which are reflected in the overall costs of running a business.
13. Marketing And Branding
The LEGO company devotes resources to marketing. The high quality and longevity of LEGOs mean that the consumers will only buy the set once.
Therefore, they must increase sales through new products, marketing, and branding.
The brand’s marketing is seen in-store, through video game development, LEGO theme parks, and movies. Exclusive licensing with other popular trends such as Harry Potter and Star Wars make their products more desirable to the consumer.
Marketing to build up the brand’s franchise leads to an increased cost for sales.
14. Legal Issues
LEGO has attempted to protect itself from competitors such as MegaBlocks and KRE-O from copying their designs. In 2002, they won a case against the Chinese brick brand, Lepin.
These legal cases cost money in order to prevent competition from mimicking their brand.
Regardless of any competition, LEGO still is the frontrunner in brick development and quality. In 2021, LEGO made a revenue of $8.06 billion, whereas MegaBlocks made only 15.9 million.
Conclusion
LEGOs cost a lot, but consumers find them well worth the cost with the benefits of play.
These durable and long-lasting bricks offer popular themed sets that fit today’s trends. The company researches and tests products to ensure that every piece works and fits.
LEGO extensively markets the brand with new products, movies, video games, and more while protecting itself from the competition.
The company also is making strides in sustainable practices and packaging for the health of the environment.
As a result, these factors contribute to a higher cost to give consumers an excellent product.