Why Legos are so expensive, yet your mom still got them for your birthday
C. Slack, "Slack pics" via Flickr
Resistance is futile. Legos bricks are unstoppable — and expensive.
Jesus Diaz at Gizmodo spoke with Lego representatives at their headquarters in Billund, Denmark and learned many facts.
For example, Diaz was told: "Approximately 19 billion Lego elements are produced per year. 2.16 million are molded every hour, 36,000 every minute."
And how many Lego bricks exist? "More than 400 billion Lego bricks have been produced since 1958. There are about 62 Lego bricks per person of the Earth's population."
The Wall Street Journal says there are 28 boxed Lego sets sold every second.
As the Lego bricks go out, the money gets raked in.
Lots of money.
NPR's Planet Money reporter Chana Joffe-Walt reported on the Lego sticker shock: "I went to Toys 'R' Us recently to buy my son a Lego set for Hanukkah. Did you know a small box of Legos costs $60? Sixty bucks for 102 plastic blocks! In fact, I learned, Lego sets can sell for thousands of dollars. And despite these prices, Lego has about 70 percent of the construction-toy market. Why? Why doesn't some competitor sell plastic blocks for less? Lego's patents expired a while ago. How hard could it be to make a cheap knockoff?"
Eamon Murphy with DailyFinance explains that Lego is not without competition: "The product is so ubiquitous — like Kleenex, only non-generic — it's easy to overlook that the Lego Group does not in fact enjoy a total monopoly: Its main competitor, Montreal-based Mega Brands — another family-run business, which styles itself after Lego and sells a line of knockoff toys called Mega Bloks — claims to be No. 1 in the preschool construction toy segment. (The Lego Group, whose patents on its brick have expired, suffered repeated defeats when suing to stop the manufacture of Mega Bloks.)
"Lego made almost $3.5 billion in revenue last year," Joffe-Walt with NPR reported. "Mega made a tenth of that. But Mega Bloks may yet gain on Lego. Mega now owns the rights to Thomas the Tank Engine, Hello Kitty, and the video game Halo. And, on shelves for the first time ever this week: Mega Bloks Barbies."
So, people can buy a Mega Bloks "Cars" Tipping Tractor with 41 parts for $179.99. Or, they can buy what Gizmodo calls the coolest Star Wars lego set, the "#10188 Death Star™" with 3,803 pieces for a mere $399.99 (the toy does not actually function as a destroyer of planets).
But why are Legos so expensive?
Lego told Murphy with DailyFinance about the expense of the toys: "Although Lego reps in the U.S. were not forthcoming, DailyFinance did speak to Charlotte Simonsen, head of corporate communications at Lego HQ in Billund, about the question of cost. Unsurprisingly, she at first said that the company 'certainly' doesn't find its products expensive, though she later admitted to having heard this complaint before. Nevertheless, she insisted, 'We feel that our products are very much value for money. What you get is of course much more than the bricks. You get very good building instructions, you get a lot of online material, you get very, very high quality.'"
Diaz at Gizmodo also raised the expensive question with Lego representatives in Billund. Their answer: "Quality and safety are the top concerns for the Lego Group. To ensure the best and safest products, Lego bricks are made with the highest quality materials, which does factor into the cost. Using premium materials ensures that the product is not only safe, but that it is durable enough to hand down from generation to generation."
And Murphy with DailyFinance points out that when you have a licensed set such as Star Wars or Indiana Jones, those entities need a cut of the profits as well, so the price goes up.
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