Are you asking $150 or more to purchase Legos Millennium Falcon? Millennium Falcon? You’re more courageous than I thought.
They’re small, they’re everywhere, and they’re painful every time you walk onto them. They’re also quite expensive for the amount they cost! What’s the reason?
They are, after all tiny plastic pieces which snap together and long as you followed the directions correctly eventually, they transform into an aircraft or boat, or even a Batmobile. A toy that is a block, in essence. The question is why do Legos so costly?
Together with David Robertson, a senior lecturer at the MIT Sloan School of Management who co-wrote the book that focuses on Lego. Lego name (Brick by Brick: Why Lego changed its Rules of Innovation and Conquered the Global Toy Industry), we discover the reasons Lego miniatures and sets are so costly.
Come on then, why are legos so expensive? It’s all PLASTIC and a lot of fun, right? LEGO is surely making a Lot of Money.
Yes and no Lego is an intricate business, with a surprising delicate distinction between failure and success. Like Luke Skywalker declared, “You can either profit from this or lose it all,” and believe it or not, Lego was actually on the edge of bankruptcy 20 years ago.
That’s why, on another hand, you may find yourself squeamish when you learn that Lego purchases ABS plastic for around a dollar per pound and offers it for sale to all the children around you for $50 per pound. However, between these two events are tons of work and resource-intensive processes.
In addition, there are some expensive licensing fees that Lego has to pay Disney as well as other companies to secure the rights to transform the universes that comprise Star Wars, Marvel, DC, Harry Potter, Minecraft, Super Mario, Jurassic Park, and other IP franchises into claw-handed tiny Lego universes.
What happens BETWEEN LEGO BUYING PLASTIC and LEGO selling the PLASTIC?
A complex quality control system, for instance. You can feel your brain overflow with the realization that each Lego piece was made from the time the first bricks were created in 1958 Every single one! The pieces fit together. This is incredible quality.
Robertson explains the process. You can take a two-by-4 brick and turn it upside down There will be a number of numbers. One of them can be “3001,” which is the shape number for the brick that is two-by-four. The two other numerals are the mold’s number (say 274, for example)) and the number for the cavity (we’ll call it 34).
“Now If this brick doesn’t connect in a perfect way like the rest of the bricks ever produced from 1958 onward, Lego could go back to examine mold 274, take from the cavity number 34, and determine exactly what went wrong and what caused this brick to be one-thousandth of a millimeter out of specification,” Robertson says.
“So the attention to detail and the quality of the product could be among the main reasons that Lego is pricey.”
As you’re able to imagine that precision is crucial for a toy company where the assembly is essential — the most important aspect, in fact. If the pieces don’t match it’s like the whole thing breaks down.
Beyond the quality control, why are Legos so expensive?
The reason is that Lego can be described as a fixed-cost company that is more like that of software, Robertson says. New molds can be expensive and the price for the first brick from mold is massive in the hundreds or even tens of thousands in the estimation of Robertson.
The second mold is, in fact, practically nothing, however, the objective is to maintain in check the number of items in their inventory and the production chain’s complexity. When Lego almost bankrupted, Robertson found that it was because the number of unique products that they produced exploded.
This is to suggest that when the quantity of components increases and the costs for the company go significantly higher. Because of the substantial fixed costs, it is a high risk for every box of Legos that the company releases and the price is according to the risk.
With the number of stakes on each box their design is vital as well as a resource-intensive part of the business, Robertson says.
How do I get it done?
They also spend lots of time designing the sets. What is the plot? Who are the protagonists? What’s the plot? Who is it aimed at? They know that boys aged 7 generally play differently than girls of the same age, and they factor this into.
Robertson mentions that Lego provides pretty good-quality instruction (which everyone will be able to see when they purchase a knockoff brick toy and attempt to determine how to assemble the toy).
When it comes to the contents of every box of Legos and the difficult task of ensuring that all the 200 pieces required to be contained in the 200-piece box get into the box. This, Robertson states is yet another aspect that consumes a lot of resources in automation and quality control.
Also, the design of the box as well as art and marketing campaigns, and all the other things that go into placing that box onto the shelf and making children and adults want to grab it off the shelves.
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What is the matter with the LICENSING?
Licenses certainly increase the price of Legos. Robertson cannot say for certain the amount Lego will pay for licenses because of a growing collection of nondisclosure agreements that he signed, but it’s reasonable to believe that it’s an enormous amount of cash.
What does it add to the price of the toys? This is a great explainer video that looked at the data and determined the cost per brick for licensed versus unlicensed ones.
The researchers found that there are a few differences firstly when you take the average of all sets — all licensed and unlicensed Lego costs about the same amount for each portion (between 10 to eleven cents).
There are also certain sets that stand out. These comprise Jurassic Park and Lord of the Rings items as well as LEGO City. Lego City stuff, which is massive, but not licensed.
The reason that these sets tend to be more expensive is due to the fact that they often include unique, large components (dinosaurs in the Jurassic Park case, or even boat hulls for City toys) that are, as we’ve mentioned before requiring more money to produce.
The third reason is that the price-per-part ratios for Disney-related subjects are around 10 percent more expensive. Therefore, if you think that those Star Wars Lego boxes strike you as being more expensive, then you’re not crazy.
This could not be merely a case of paying Disney the prince’s (or more accurately princess’) ransom for the privilege of being able to, in turn, mark up everything related to Star Wars. Star Wars stuff apparently takes longer to design and takes more time due to the additional review procedures required for it all.
But, license charges are certainly a key reason Lego invests so much in creating the intellectual properties of its company, for example, Ninjago being just one example.
ANY OTHER REASONS WHY LEGOS ARE SO EXPENSIVE?
Yes, those tiny Goddamn bricks are made of indestructible design. A lot of design. It’s also expensive to make. “Everybody is talking about how uncomfortable it can be to step onto the surface of a Lego but it actually is, but it’s because they’re not able to shatter,” Robertson says.
“The most dangerous thing to do is when a toddler stepped on the brick and chewed it up it, breaking it into sharp fragments. They test for this. They ensure that each brick is strong enough to withstand a massive volume of force.”
Also, every when you walk across an incredibly sharp and small Lego is sure to keep in mind you could get worse if your company did not spend as much making sure that it doesn’t end up as smaller, sharper pieces in your shoes. However, it is a cost that they’ve passed along to you.