When you consider buying bricks toys for your kids to help them spend time and also expect them to develop problem-solving skills and unlock their imagination.
The first brand that comes to your mind may be Lego, but you find most of its sets are expensive when compare with other brands. For example, simple sets will cost around $25 – $50, while a complex-designed set may cost you more than $200. You’re confused about why Lego’s plastics costs so much.
Generally, these factors together make Lego sets expensive: high quality (quality raw materials, high precision, durability, safe for children), brand and popularity, research and development cost, license and royalty fees, and marketing costs. Let’s explain one by one.
High quality is the main reason that Lego’s elements can sell at a high price. Some consumers who think Lego’s price is expensive plan to buy other cheaper brands, but finally some of them may still choose Logo. So why are these consumers willing to do that?
Because of Lego’s high standard in raw materials, molds, and molding process, ensures its products unmatched quality: safety, high precision, and durability. While some competitors’ bricks get damaged easily or cannot fit together very well, some even have a pungent smell.
High Quality Raw Materials
LEGO uses a variety of materials in its elements (mainly 12 types), each material is chosen based on its specific properties and the role it needs to fulfill in the LEGO system, ensuring that the toys are safe, durable, and fun to play with.
ABS (Acrylonitrile Butadiene Styrene)
This hard plastic is used for the classic LEGO brick and LEGO DUPLO. It’s scratch-resistant and provides optimal clutch power, making it ideal for enduring decades of play.
HIPS (High Impact Polystyrene)
Used for LEGO baseplates, HIPS is a very strong and tough material, providing a perfect base for LEGO creations.
This material can withstand high loads and impacts, making it suitable for elements like gearwheels and connectors.
MABS (Methyl methacrylate-acrylonitrile-butadiene-styrene)
Similar to ABS, MABS is used to make elements transparent, such as light saber blades and windscreens.
MTPO (Metallocene Thermoplastic Polyolefins)
A soft material that can be easily bent and twisted without breaking, used for elements like flexible rods and baskets.
A strong and impact-resistant material used for elements like hinges and ball and cup connectors.
A soft, durable, and flexible material made from sustainably sourced sugarcane. It comes in two variants; HDPE used for elements like flags and limb elements, and LDPE used for small flexible elements like stalks and sea grass.
A hard and stiff material that is also flexible and strong, used for making axles and connector pegs.
A tough material used for LEGO elements that add an extra spark to a build, like a ninja sword or a LEGO storage box.
TPU (Thermoplastic Polyurethane)
A strong yet soft and elastic material, perfect for making LEGO elements that can be bent and twisted without separating.
A soft and elastic material used to make LEGO tires and elements where a certain ‘give’ is needed.
TP (Thermoplastic Polyester)
A tough material that can also offer high transparency, used to make elements as diverse as roof tiles and dragon fire.
Quality and precision have always been integral to LEGO’s production process, as reflected in their motto: “Only the best is good enough.” This commitment to quality has led to continuous improvements in their production methods, particularly in the era of plastic molding.
For example, the raw material ABS ensures precision in molding with an accuracy of 1/200 mm. As you can imagine clutch power generated by such high precision standards can make two bricks stick together more consistently.
Another core quality of Lego sets is they’re durable. The Lego System is all about making sure every piece can connect with each other perfectly, no matter when or where they were produced. This means you can fit the Lego bricks you bought a long time ago together with the ones you buy in the future.
You can imagine the Lego toys you played with when you were a kid can give to your kids, even to your grandkids. So you can play them for 30 years or even 50 years. From this view, Lego is cheap for the long usage time as there are merely brick toys that can last that long.
Safe for Children
LEGO is committed to providing safe, high-quality products that meet and often exceed global toy safety standards. The company has a rigorous safety assessment process for any new material used in its products.
The safety process involves several steps:
- Assessment: LEGO screens scientific research and legislation for updates, and only approves the safest raw materials for their new elements.
- Testing: Every individual LEGO element goes through various safety assessments and tests, including chemical, physical, electrical, hygiene, and flammability tests.
- Production: During the production of new LEGO elements, continuous testing for quality and safety is conducted, including third-party approval when required.
- Feedback: LEGO interacts with children and parents to get feedback on their play experiences.
LEGO also conducts specific tests like the Bite Test, Impact Test, Compression Test, and Drop Test to ensure the durability and safety of their products during play. Also, they perform chemical tests to ensure that no color pigments migrate from the LEGO element when in contact with sweat or saliva.
2. Brand and Popularity
When talking about building bricks for kids, which brand comes to your mind first? LEGO is the No.1 brand in the category of building blocks for kids. As you can understand, being a top brand in any category often comes with a higher price tag.
LEGO’s popularity means that there is a high demand for its products. In economic terms, when demand is high, prices can also be high. This is especially true for limited edition or hard-to-find sets, which can become collector’s items and command even higher prices.
Imagine you’re in a store, looking for a gift for your special little one. There might be other options that cost less. You notice other brands, but you’ve never heard of them before and you’re not sure if they’re as good as LEGO.
But you know for sure that LEGO is the best of the best. You don’t want to let your little one down, so you choose LEGO.
3. Research and Development Cost
To stay competitive in the market, LEGO needs to keep creating new designs, sets, and series.
According to the LEGO Group’s Annual Report 2021, the company has significantly increased its investments in initiatives designed to drive long-term growth.
In 2021, LEGO’s research and development expenses were 1.5 Billion Danish Krone (approximately 210 Million USD). There is no clear number for this data in LEGO 2022 Group’s Annual Report
In 2022, almost 50% of their products were brand new. They put money into making their classic themes even better and finding new ways to play. They also looked at how digital and physical play can mix and make new things for fans of all ages and abilities.
Plus, Lego tried to make learning fun, kept an eye on trends, and worked with schools to learn more about how kids grow and learn.
4. License and Royalty Fees
Licensing and royalty expenses can also contribute to the high cost of Lego sets. In 2022, Lego’s license and royalty expenses were 5.5 Billion Danish Krone (equal to 770 Million USD).
Here’s a brief explanation:
Lego often collaborates with various franchises to create themed sets, such as Star Wars, Harry Potter, Super Mario, and more. To use these brands’ characters and themes, Lego has to pay licensing fees to the respective companies.
Licensing costs are fees paid upfront for the right to legally use these copyrights. These fees is then passed on to the consumer, contributing to the higher price of these sets.
In addition to licensing fees, Lego pays royalties to companies like Disney for the right to use Star Wars characters and themes in their sets. These royalties are typically a percentage of the revenue generated from the sale of these sets.
Unlike licensing fees, which are usually paid upfront and cover a specific period of time, royalty payments continue for as long as the product or service is being sold.
5. Marketing Costs
Every company needs marketing. You can see companies like Coca-Cola, Apple, and indeed, LEGO, investing heavily in marketing to maintain their brand image and reach their target audience. LEGO is no exception to this rule, and its marketing expenses play a significant role in the pricing of its products.