Why Are Legos So Expensive? (The Short Answer)
LEGOS are certainly more expensive than their competitors, but the company claims higher quality materials and increased durability are responsible for the price difference. Licensing deals with the likes of Marvel and Disney probably account for a big chunk of the cost as well.
I recently had a conversation with a friend who, as an adult, had decided to take up his childhood hobby of building LEGOs. He enquired whether my kids play with LEGOs (they do) and then lamented the high price of the sets.
Evidently, he wasn’t prepared for his renewed hobby to be quite so expensive.
As a Star Wars fan, he had been excited to acquire and build the limited edition LEGO Millennium Falcon set and was floored to find out it cost $800 new and was on a reseller market for as much as $4000.
Assuming this was a Star Wars specific issue, he looked into regular LEGO sets, but found them to be less than $800, but still costly.
Some questions arose in the course of that conversation; why were we persisting with LEGO despite agreeing that the sets seemed expensive?
What about LEGO competitors?
Since LEGO lost its EU trademark case, where the company unsuccessfully tried to argue that no seller could sell stacking blocks resembling LEGO, hundreds of competitors had popped up.
So, why hadn’t we ventured into purchasing any blocks from Mega Bloks, since the blocks are seemingly identical and almost half the price?
Above all though, I wanted to know why LEGOs are so expensive? There seems to be several factors involved, which I have laid out below, to hopefully answer this question.
Top 5 Reasons LEGOS Are So Expensive
1. Quality & Safety
LEGO is certainly more expensive than it’s direct competitors, but the company claims higher quality materials and increased durability are responsible for the price difference. Certainly anyone who’s stepped on a LEGO brick in the night can attest to its strength.
Each and every LEGO brick has three printed numbers on the inside, identifying the exact mold that brick came from and it’s position within that mold. The idea being that if a bad brick gets reported; LEGO can go back and fix the exact mold it came from.
This is a part of LEGO’s brand strategy, to provide a good experience for each and every customer. It’s not actually that easy to build million of tiny bricks which fit together seamlessly to create intricate structures which can then easily be taken apart, time and time again.
Additionally, as an 8 billion dollar company, LEGO isn’t risking any lawsuits and so they take safety very seriously. Materials are safe, non-toxic and undergo rigorous safety assessments, which include simulations where kids bite, drop and step on every LEGO element to ensure they don’t break.
Certainly anyone who’s stepped on a LEGO brick in the night can attest to its strength.
Your older LEGO from the 70s and 80s may in fact be toxic, but any new sets are pretty foolproof, the only issue being babies who find a brick missed in cleanup, which is a potential choking hazard.
As LEGO chief marketing officer Julia Goldin puts it:
We believe Lego products are unique and deliver great value for money. In addition, our products meet the highest safety and quality standards and last for generations.
And it does last for generations.
My older brother gifted my nephews and my kids with LEGO blocks that belonged to him as a child, from the late 80s. They’re now being used by my kids, my nieces and nephews and are going strong, integrated in with Harry Potter, Toy Story and Star Wars characters and blocks.
2. Licensing Deals
That feeds in nicely to my next point. After losing its trademark deal back in 2010, LEGO turned to trademarked content as the way forward. Such licenses do not come cheap and LEGO likely pays big bucks to Marvel and Star Wars for use of their characters and themes.
LEGO also has the licenses for Harry Potter, Toy Story and Indiana Jones among others.
These sets tend to run at higher costs than regular LEGO sets and it’s because the established properties get a cut of what is sold, but it means that it drives up the price of LEGO overall.
Plus, anyone with LEGO obsessed kids knows that these are the sets that they want and since LEGO has the exclusive rights, that’s the set they’re getting.
It’s interesting to note that LEGO’s competitors are following suit. MegaBloks has the licenses for Thomas the Tank Engine, Hello Kitty, Halo and Barbie.
3. Advertising & Branding
Two words: LEGO world.
LEGO has managed to supercharge its brand to the point where it has created a wildly successful amusement park, not to mention the countless TV shows and movies based on LEGO original and licensed characters.
Brand finance estimates LEGO as the number 1 toy brand on the entire planet and estimates on the brand’s value puts LEGO roughly 5 BILLION dollars ahead of the number two brand. 5 billion!
LEGO pays huge amounts to keep its brand in the public eye and in public consciousness, which plays a part in its pricing. But pricing is also a part of its brand strategy because it explains and proves their durability, quality and reinforces why the LEGO reputation is so good.
You get what you pay for after all.
Another important point here is that LEGO is still a family-owned business and so doesn’t disclose the specific per-brick costs and profits. So we don’t actually know whether pricing is reasonable, a branding strategy or how much it’s changed with the times, but more on that later.
4. Research & Development
A huge part of that reputation and brand development comes back to research and development. Consider how difficult it would be to build an intricate LEGO set without instructions.
Now imagine trying to conceptualize that set from scratch.
Then imagine having to ensure that not only does your set work, but also can be taken apart and incorporated into other pre-existing sets.
An integral part of LEGOs brand identity is that it’s a toy that can be included in the educational or STEM portion of the toy store. That means it requires big brains and huge creativity to continuously be putting out new, inventive and exciting sets to satisfy everyone from kids to avid collectors.
As a result, LEGO is always building its design staff and employ people who sketch characters, people who design new bricks and people who just build LEGO all day.
Also, In recent times, LEGO has turned a huge amount of design and funding towards the development and implementation of sustainable raw materials to manufacture LEGO components.
LEGO has also hired an additional 100 specialists within the materials field to help work towards their goal of making LEGO more sustainable. This is a cost that their cheap competitors would never even consider.
5. Resale Value & Collectors
Another win for the LEGO brand is the huge number of collectors and enthusiasts it has amassed over the years. These fans and customers are driving up the resale value of both limited LEGO sets and plain blocks, all of which adds to the myth of the LEGO domination in the world of toy brick building.
As mentioned earlier, the Millennium falcon set retailed for $800 but now resells for as much as $4000. Another great example is the Taj Mahal LEGO set, which is the largest ever made, retailed for about $350 and resells for over $3000.
In fact, LEGO sells more and more sets, aimed less at children wanting to experiment and play, and more at adults who are wanting to build and display.
In the recognition of this new wave of LEGO hobbyists, who have more money (they’re not relying on birthday money anymore) and who are less likely to use one set over and over, LEGO has done what none of it’s competitors can, in creating a new collectors market.
Again, this adds to its reputation as the leader in the field and inevitably drives up the price of its bricks and sets.
Additionally, it has created the need for larger, more intricate sets, often with licensed characters. These two factors combined inevitably mean that these sets have a higher price point.
Has LEGO Always Been this Expensive?
As a parent of pre-teens, I can attest to the cost of LEGO. I’ve often thought that if I ever lose my job, I can probably round up all the LEGO in the house and resell them for a tidy profit.
I have also wondered though, whether my parents felt the same way about the LEGO that littered their floors when my siblings and I were young.
This begs the question, is there a chance that LEGO has always cost about the same amount?
Certainly this article makes a compelling argument that the price of LEGO hasn’t changed much over the years and hypothesizes that the secondary market is to blame for the perception that LEGO is more expensive now than previously.
Certainly, LEGOs ubiquity and brand name elevation in recent decades has created a more widespread consumer base, meaning more people want it and there are more opinions about it’s price.
Similarly, it’s relatively new mass of competitors, with their lower prices, means that we can’t help but look to LEGO and wonder why it costs almost double those who offer a seemingly identical product.
So, maybe in fact it’s a matter of perception and LEGO has always cost the same amount. The question we now have to ask ourselves is:
Are LEGOs Worth The Price?
The simple answer is that it’s all a matter of opinion.
In my humble opinion, you can get away with cheaper competitor products for younger kids who just want simple building blocks. As long as you pick a good quality competitor product, they’re safe and virtually identical and your kids just won’t know the difference.
When your kids get older and start comparing notes with their friends, or get to know and become fans of Star Wars, Harry Potter, Toy Story etc., you either won’t have a choice because of licensing, or you’ll risk a very sad kid when their friends tease them for their off-brand non-LEGO blocks.
The best thing to do is use them over and over again. It’s what they’re made for and the more you play, the better value the LEGO becomes.
They’re also fun activities for parents to take part in with their kids, meaning the value increases and becomes almost priceless as you reinforce family ties and bonds.
You can also think of the LEGO sets as high-end models instead of simple building blocks because it makes the prices easier to accept.
LEGO sets are well made and often beautifully designed, so much so, that many kids (and adults) want to display them. They may display them for a time and then take them apart to incorporate in new building designs.
Or, they may want to keep them forever, like little pieces of art. In fact, the actor Orlando Bloom has an entire room dedicated to displaying completed LEGO sets that he’s created with his 9-year old son Flynn, ranging from 1960s Porsches to epic trucks.
Finally, consider is the generational staying power of LEGO. My kids absolutely love that they have some LEGO blocks from when their Uncle was a kid. I hope they’ll keep them and pass them onto their kids and their kids after that.
It’s funny to think that you wish for pieces of plastic to be passed down for generations, but this is the influence of LEGO and a part of the reason that we can ultimately justify the cost.