
Why Are Lego Sets Expensive?  - riledhel
http://www.wired.com/wiredscience/2013/01/why-are-lego-sets-expensive/
======
jacquesm
What's more expensive, a toy that gets used once on Christmas day and then
gets discarded that costs $10, or a lego set that costs $50 and that gets
passed down three generations or more?

Some of the lego my kids are playing with went through this route: my uncle,
me, my brother, my son, my brothers kids. The oldest pieces I've got are from
the early 60's, they have a different formulation and didn't keep their shape
as good, but anything produced after roughly 1965 is as good as new today.

~~~
Tichy
My son is playing with the bigger Lego pieces at the moment (Duplo), and I
have the impression that they wear out a bit. What I mean is that they won't
stick together as tightly as in the beginning. For example we bought a used
set from ebay that includes a crane, and the crane is very prone to toppling
over because it doesn't stick to the base very much anymore.

Anyway: what is the best way to clean LEGO? I've been wondering about that for
a while :-)

~~~
jacquesm
The best way to clean lego is as far as I know to stick it in a pillowcasing,
tie it shut and run it through the washing machine!

~~~
zacharydanger
[http://bricks.stackexchange.com/questions/124/lego-
cleaning-...](http://bricks.stackexchange.com/questions/124/lego-cleaning-
techniques-and-tools)

There seem to be some pro tips on the Lego StackExchange.

~~~
timjahn
And I now know that there is a Lego StackExchange. Simply amazing!

------
StavrosK
There was a reddit comment the other day answering the exact same question.
The person worked in a factory that cast plastic pieces for Lego as well as
other companies. He said that Lego had much, much tighter tolerances, that
they threw away many more pieces which weren't made to spec, and that they
required much more expensive and frequently replaced molds.

I can't find it at the moment, unfortunately...

~~~
neumann_alfred
Would it be legal to make compatible bricks which are called differently? If
so, why is nobody doing it? If not, there is your answer why LEGO is
expensive; to quote the dude from Idiocracy, "ohhh, I _like_ money".

~~~
femto
Yes, and they are doing it. For example, "Mega bloks" [1]. We have both at
home, and in my experience, Mega blocks are interchangeable with Lego.

[1] <https://en.wikipedia.org/wiki/Mega_Brands#Lego_lawsuits>

~~~
neumann_alfred
Nice! But note Lego tried their best to fight them.. instead of welcoming
friends and competition in this huge undertaking of measuring bricks
correctly. Those Lego guys must really have figured out some hi-tech stuff
there, so much is obvious; and it must weigh hard on their shoulders to not be
able to share that with the world through a medium other than selling colored
plastic blocks :(

~~~
femto
The thing I'd like to know is whether there are third parties producing
components that Lego doesn't. For example:

* A Lego compatible case, that can accept an Arduino board.

* A range of Lego compatible sensors and actuators

* Other components following the theme of integrating open-source with Lego.

* and so on...

\---

Edit: formatting

~~~
hugs
I'm working on something very similar. I'm making a 3D-printable LEGO-Technic
compatible version called "Bitbeam". <http://bitbeam.org/arduino-mounting-
plate>

I started the Bitbeam project because I was prototyping some things in LEGO,
but when it came time to figure out how to make many of them, I wasn't too
excited about the cost of LEGO... but I was happy with my LEGO design. So I
decided to port LEGO dimensions to materials that are easier and cheapier to
source myself.

~~~
iamdave
Eghads it's like Ardurino meets the Erector set. Genius.

------
benzor
I can certainly appreciate the precision of Lego pieces, as I too have mixed
and matched incredibly old pieces from my parents's era (1970s) with more
recent (2000s) stuff. And I think the OP did a decent job collecting precision
data for the article.

However I find the post title to be misleading as surely there's a whole lot
more that goes into the actual market valuation of a Lego kit. What about the
type and quality of plastic used, the rest of the manufacturing process,
quality control, the overhead of having to design new kits regularly, etc?
Building Lego kits is more than just shipping cheap generic plastic widgets
from China straight to store shelves.

For what it's worth, I've found Lego designs to be consistently excellent,
with well thought-out part selection, part placement, structural integrity,
and so on, in everything from the small $10 kid sets to the $300 Mindstorms
NXT kits, so the price has never really bothered me.

~~~
markkanof
There must also be non-trivial cost to licensing certain brands such as Star
Wars.

------
rayiner
Besides the obvious answer that cost is not a first order determent of price?

~~~
Avshalom
In addition, walk down a toy aisle some time. Lego sets aren't cheap but
relative to toys in general "legos are expensive" feels more like truthiness
to me than truth.

~~~
InclinedPlane
Relative to the cost of manufacturing, all toys are highway robbery. You
probably don't want to know what the wholesale costs on di ecast toy cars are,
for example (it's effectively zero).

But that's how the economy works, there's a profit margin at every step. If
there wasn't people wouldn't sell things or do things.

~~~
kamaal
What are the profit margins for toy making companies like? Do they lose out
much if the toy doesn't sell well? How is it when the toy sell well?

~~~
nikcub
The financials are similar to the food conglomerates (P&G, Kraft, Unilever,
Mars etc.). The businesses are hit-based, and each firm usually has one or two
very profitable lines and a lot of lines that lose money or break even.

Low manufacturing costs but very high user acquisition costs. Toy companies
rank in the top 10 on advertising dollars spent (after automotive, food,
pharma, department stores, fast food, telephony, alcohol). Mattel has $0.7B of
net income on $6.2B of revenue. But if you took the Barie and Hot Wheels
businesses on their own, the margins there may be 40%+, but subsidiaries like
The Learning Company are losing hundreds of millions per year.

The Lego Group[0] has 0.55B euro net income on $2.5B euro of revenue. A better
margin than Mattel, but a smaller business. Lego also has new release lines
that they depend on to continue growth. For eg. the Star Wars tie-up, Lord of
the Rings, etc. some of these work, some don't. They need to keep giving
buyers a reason to come back and purchase more - which is why Lego has gone
from generic buckets of bricks to specific sets with instructions that you
assemble once and don't disassemble.

Not mentioned in OP is that until a year ago Lego had a strong world-wide
patent. It has only been the last 12 months that competitors have released
similar sets of bricks which are forcing more competition on the company. Lego
would be happy to hear that when I took my 3 year old niece shopping she only
wanted the Lego brand Lego, and in that case only the sets that were cross-
branded with characters she recognized (I think it was Dora the Explorer).

If you want to find out more, the largest toy co's are Mattel, Hasbro, Bandai,
Lego, Tiger. They are all large co's and the other 4 besides Lego have suites
of brand names and subsidiaries.

[0] Lego Group 2012 financials -
[http://cache.lego.com/r/aboutus/-/media/About%20Us/Annual%20...](http://cache.lego.com/r/aboutus/-/media/About%20Us/Annual%20Report/ts.20120301T121813.Annual_Report_2011_UK.pdf)

~~~
pja
According to the wikipedia page, the last Lego patent expired in 1989. There
may have been some design patents that expired more recently perhaps (assuming
wikipedia is correct) ?

My experience of the Lego knockoff products has been that they use inferior
plastic that isn't quite as stiff as the Lego formulation and they don't get
the internal moulding right either, so the parts don't lock together in quite
the right way: they don't have that secure 'click together' feeling that Lego
proper has.

~~~
nikcub
Here are some of the stories from last year:

<http://bo-ne.ws/forum/read.php?7,32149,32149>

<https://plus.google.com/+ChrisPirillo/posts/Df3JbGjdNe4>

Apparently they prolonged their IP protection with a trademark, which was
dissolved in court last year:

<http://boingboing.net/2005/11/17/judge-to-lego-your-p.html>

<http://boingboing.net/2010/09/15/lego-cannot-be-trade.html>

------
prezjordan
Interesting to see how low the standard deviation is. Compare that to K'NEX (I
_love_ K'NEX by the way) where a not-so-right angle is commonplace. Sometimes
the rods have plastic bulges at the ends which prevent them from making a good
connection in a female(?) piece.

LEGOs, however, have always fit perfectly, in my experience.

~~~
cubicle67
We have a good supply of both Lego and K'Nex here. I agree with your comment
on K'Nex manufacturing but add that it doesn't really matter. K'Nex seem
designed to connect well and holdtogether well despite this (I'm talking about
the rods/joiners, not their stupid Lego-like bits which are just horrid)

K'Nex and Lego are different and my kids play wth both about equally I'd say.
They get used to build different stuff and they're both awesome :)

~~~
batiudrami
K'Nex rock my world. About 6 years back, when I turned 18, I finally ordered
the 'back of the catalogue' 3000+ piece Big Ball Factory set on eBay, after
spending hours imagining how cool it would be to have it back when I was
little.

It was awesome. My mates and I still build it occasionally.

------
tragomaskhalos
I too have a fair bit of Lego from when I was a kid in the 60s/70s that my
kids play with today. It's worth noting that it was (relatively) expensive
even back then.

My observations on the quality of my old pieces is that they are generally
excellent and certainly still usable, but:

\- Some of the white pieces have discoloured quite noticably

\- Some of the white plates (but interestingly no other colours) have
deteriorated noticably

\- The fit between pieces seems to be a lot tighter, so that prising pieces
apart can be a challenge.

But really it would be churlish to overstate these issues - for this stuff to
still be usable after 40 years is a testament to the quality of engineering
that has gone into it. We have acquired bits of the various "knock off" Lego-
esque brands and the inferior quality of these is immediately apparent.

~~~
rsheridan6
I passed down the same older Space set that was mentioned in the article,
along with a few others, to my son, and now it's mixed in with mostly newer
Legos. The pieces are indistinguishable except for the unique pieces like the
amber windshield. Maybe something changed from the 60s/70s to the early 80s
when I was playing with Legos, but I don't see any degradation.

------
zintinio
Taken from
[http://www.reddit.com/r/geek/comments/14ccan/lego_super_star...](http://www.reddit.com/r/geek/comments/14ccan/lego_super_star_destroyer_now_available_at_target/c7buwv0?context=1)

"Every single lego brick made has to fit together perfectly with every other
lego brick EVER MADE. So the piece you get in your new super star destroyer
has to snap together perfectly with a piece from a model house made in 1970.
To achieve this, they run size tolerances on the order of .0005" "

------
gordeh
I've built lots and lots of lego over the years and tried several competitors
as well. In fact I built a megablocks porsche last night for my son. The
difference between lego and the rest is quite big. First the bricks are
perfect on lego, perfect colour and no scratches or flaws. Next the
instructions for lego are clear and easy to follow. Then you've got the parts
bagged up in sensible sized packs which allow you to complete the steps
required without having too much lego about you.

The megablocks kits was cheap, but the instructions were truly terrible. There
was even a small addendum sheet thrown in with corrections one of the
corrections was wrong itself!!

Add to this the blocks were not of great quality and the colours weren't
consistent.

I almost never pay full price for Lego as there are always offers to be had,
but the extra is well worth paying. I have kits from the 80's mixed in with
todays stuff and it all fits perfectly.

Not to mention that Lego's support is great.

------
neves
You have no idea about expensive Lego. In Brazil, a simple firefighter
airplane in Walmart will cost you more than US$130,00! The list price in the
USA is US$60,00. See for yourself:
[http://www.walmart.com.br/produto/Brinquedos/Lego/Lego/34301...](http://www.walmart.com.br/produto/Brinquedos/Lego/Lego/343016-LEGO-
Aviao-de-combate-ao-fogo-4209)

------
BrandiATMuhkuh
My brother and about half of all people in my area in Austria work for a
company called ENGEL. This company produces Injection Molding Machines (EN-
Wiki: <http://goo.gl/2fxjB>, DE-Wiki: <http://goo.gl/NS9F8>). This company is
also main provider for Tupperware and LEGO. One machine cost around 1Mio. Euro
and the mold has always more or less the same price than the machine. That
means that every product created with Injection Molding should have a very
high quality because of the price and the effort you have to put in to create
a mold. The only reason, my bother says, why some products have a bad quality
is, the plastic material is not as good as the one from LEGO.

This is the location of their headquarter <http://goo.gl/maps/9EOIk>
<http://www.engelglobal.com/>

------
danjessen
Coming from Billund (where LEGO is made and invented) ... having friends and
parents who worked +25 years at LEGO. My dad having worked both with
construction and design of the plastic molds for all those years. I can say
that the only reason LEGO is more expensive, is because its a high quality
product made in Europe (mostly Denmark) and not in China.

~~~
jncraton
I just wanted to point out that while this was true in the past, a number of
the lower volume Lego parts (minifigs, animals, etc) are actually now
manufactured in China.

------
brokentone
So... the article... Hypothesizing that it's primarily due to tight
tolerances. Shows that they're indeed tight, and have remained similar to
legos made 40 years ago. However, similar to what appear to be "random cheap
dollar store building blocks." Best sentence "Honestly, I don’t know much
about plastic manufacturing – but the LEGO blocks appear to be created from
harder plastic." - This is why they made interviews. Really wasn't so
interesting and didn't answer the question.

~~~
cubicle67
Lego is ABS which is relitively expensive while most competing bricks are made
from polystyrene.

The tolerence is the key thing though - we've got a reasonable selection of
lego here as well as a few sets of Mega Blocks, Kreo and the odd chinese
brand, and there's a _huge_ difference in fit between brands with none coming
close to Lego. Try watching your kid build something only to be unable to play
with it because it keeps falling apart because the brick fit is sloppy

------
dons
Can I print open source lego-compat pieces from my 3D printer yet? Basically,
my dream at age 6.

~~~
primitur
The secret about Lego is that the parts that don't make it through their
quality-control, are all recycled.

You can melt a Lego, use it as a paste, and form something else. If you know
the right way to cook it, of course .. and Lego do.

So, there's that.

Looks like the 6-year old you is going to get a robot, finally, to do all the
assembly. ;)

------
csense
I don't know about the current market for building blocks. But my guess is
that Lego is benefiting from monopolist pricing. This is just a guess; I don't
really have good knowledge of pricing and products that exist in this
category.

If there are less well-known brands, with possibly lower quality, that sell
for lower prices, Lego's continued success would argue that these competing
products aren't perfect substitutes. In other words, Lego extracts a premium
for its unique attributes: Quality, the prestige of the brand name, exclusive
licenses for movie-themed sets, or patented brick designs might be some of the
fences that could be protecting their market share.

Economics 101: If it's easy to build businesses that replicate your goods and
services, then competitors will enter the market and bid each other down until
prices reach levels that make profits disappear. (If someone's making a
profit, then someone else can and will bid a little lower and gain market
share in exchange for a smaller per-unit profit.)

If Lego has a unique success formula that other companies can't duplicate for
whatever reason, then they can act as a monopoly and charge a price that
maximizes unit profit times volume.

------
mwexler
Impressive: an article about price without the word "demand" or "supply". Or
about the standard for "expensive". This could have been interesting, but
didn't quite get there.

As a consolation prize, I offer: [http://gizmodo.com/5019797/everything-you-
always-wanted-to-k...](http://gizmodo.com/5019797/everything-you-always-
wanted-to-know-about-lego) Also light on analysis, but full of fun trivia.

------
brudgers
Comparing the deviation of wooden planks to Lego is meaningless. Planks have a
heterogeneous internal structure, the structure of each plank is unique - we
can even see the grain in the photograph - and wood is more dimensionally
sensitive to changes in environmental conditions than Lego.

------
olivier1664
Would be interresting to check if the cheaper Lego clones
(<http://en.wikipedia.org/wiki/Lego_clone>) have the same qualities.

------
pixie_
How many karma points do I need to vote down something?

~~~
DigitalJack
Presently 500, but you can't downvote stories.

~~~
batiudrami
I have had an account for 4 years and have never managed to hit the magic
number. I swear it always goes up just as I get close.

Not that it matters, it just always feels just out of reach.

~~~
spoiledtechie
4 years? I would suggest being more involved in articles...

~~~
batiudrami
I prefer only to comment when I have something useful to add, which given my
non-programmer background isn't always that often.

~~~
DigitalJack
If an article on HN was interesting enough for you to click on it, I would bet
that you have a comment that would contribute to the story.

Your non-programmer background is most likely an asset on HN, simply because
you can offer a point of view that most others here can't.

------
richforrester
This might sound fairly stupid, but I always thought longevity had something
to do with price. It's plastic, and will last many, generations.

This might also be why they keep coming up with new shapes for blocks.

ps.: longevity assumes one doesn't use ones teeth to pry apart blocks.

~~~
sonicvoxel
Or that one is a dog owner.

------
cubicle67
Try buying them in Australia where the RRP is almost exactly 2x the US RRP for
most models :(

~~~
lessnonymous
The nerd in me read this hours ago. When I got home I had to do some data
mining of the Lego site and put the numbers together.

Average Brick Price

    
    
        Australia:18.3c
        UK: 14.9c
        USA: 10.8c
    

So yes, the price is almost double in Australia what it is in the US.

Average Licenced Brick Price

    
    
        Australia: 22.0c
        UK: 17.5c
        US: 11.5c
    

If the link works, you can see all my numbers on my Facebook page:
<http://rick.ph/lego_price_analysis>

~~~
vacri
Remember that Australian prices include 10% GST which the US prices won't
have. Similarly, the UK will probably have 17.5% (I think) VAT. Still much
pricier, but a shade less so.

At least there's the pseudo-excuse for the increased price of actually
shipping physical goods, as opposed to the argument for digital downloads
which is "Hey, look over there! _scamper_ "

~~~
bluepaper
Just to note, UK VAT has been at 17.5% previously but is now at 20%.

------
capitalj
It won't be long till everyone is making their own legos at home with 3d
printers.

------
sbmassey
Surely the price of Lego will plummet if 3D printing ever lives up to its
promise.

~~~
DigitalJack
How so? I can't imagine printing your own bricks will ever be cheaper that
mass production.

~~~
dsr_
However, the market for rare pieces will first see counterfeits, and when the
counterfeits get good enough, collapse back to the marginal cost of ABS +
production.

~~~
wtracy
It would collapse back to the cost of 3D printing the parts, which is still
significantly more than the cost of molding ABS.

------
wissler
Interesting article, but did nothing to explain the cost, it merely assumed
that tight measurements means they would be that expensive or why they
wouldn't keep getting better and better at making them such that the cost
would go down over time.

