What Happened with LEGO « Reality Prose

The price of a brick.

“What happened with Legos? They used to be simple. Oh come on, I know you know what I’m talking about. Legos were simple. Something happened out here while I was inside. Harry Potter Legos, Star Wars Legos, complicated kits, tiny little blocks. I mean I’m not saying it’s bad, I just wanna know what happened.” — Prof. Cane – Community

LEGO® sets are not cheap toys. They are made to the highest standards and have the price to go along with it.  However, in the past couple decades it seems that the price of LEGO sets has become outrageous. New sets can sell for up to $500 retail and old sets can sell for twice that in a secondary market. This is a children’s toy, right? There is no way LEGO sets have always been this expensive; it is just molded plastic. Let’s take a look at the history of LEGO pricing and try to figure out what is going on.

Evaluating the price history of LEGO sets

In order to come to some sort of conclusion about the price of LEGO, I needed to get some data on the historic retail prices of LEGO sets. The best source of this information is brickset.com. This website has data on almost all LEGO sets ever made and the retail pricing for many of them. I wrote a web scraping program to go through the Brickset database and make a database of set information. In order to keep the results relevant, I decided to compile one set that fit two basic qualifications:

1)  They have a price listed. Almost all sets since 1980 have their retail price listed as do many sets before that year.

• There is not a way to qualify the price of a LEGO brick without first knowing the price of the set the brick is in.

2) The set contains at least 25 pieces.

•  This is an arbitrary line but it is a line that needed to be drawn. There have been many promotional sets over the years which have very few pieces but carry a higher price because of their promotional status. These can range from keychains to individual minifigs to seasonal items. They are not representative of the typical price of a LEGO brick and therefore should not be included in the evaluation.

I then calculated the price per piece1 of each set and adjusted it for inflation. Finally I calculated the average of each year, adjusted for inflation, and put it into graph form. Figure 1 shows the results (prices are in US dollars).

Figure 1 The average price per piece of a LEGO brick since 1960

Data on the price of sets before 1980 is lacking  so I focused in on the data from 1980′s to the present as seen in Figure 2.

Figure 2 The average price per piece of a LEGO brick since 1980

From a preliminary look at our data, it appears the price of LEGO has actually decreased. Given what this graph shows, why does it seem like the price of LEGO has increased in price?

Evaluating the perception of price.

Many who received their first LEGO set in the early 1990’s are now adults looking forward to buying a LEGO set for their first child or for themselves. When we are younger, we do not fully understand how money works. We do not realize that a large LEGO set can require hours of work to earn. We only know what we want. I would wager that it isn’t until our first jobs that we can fully appreciate the value of money. We all wanted the large sets as kids and we didn’t realize how hard our parents had to work for them.

Let’s look at some examples to illustrate this point.

Pirates in some form or another have been an integral part of LEGO since 1989. Recently, the generic traditional pirate theme has been superseded by the Pirates of the Caribbean theme. However, with no more films on the horizon, this theme is sure to wind down and we should be seeing the return of the beloved Pirate theme in the near future.

Over this period of 23 years, there have been quite a few different Pirate Ships. Let’s compare these ships. (NOTE: does not contain junior or Duplo sets because the pieces are priced differently and would not be a fair comparison).

Figure 3 Table of LEGO pirate ships and their prices

From this chart, you can see that there has been no real trend in the price per piece in these particular sets. The weighted average (larger sets weigh heavier than smaller sets) for the price is 13.19 cents per piece. The size of the ships did seem to increase in the last couple years; however, 3 data points does not make a trend (I will visit this idea later). For those of you who had a pirate ship growing up (I was lucky enough to get the Skull’s Eye Schooner), you may not have realized it, but it wasn’t cheap. And, the prices in this chart do not take inflation into account.

Let us take another example, the LEGO castle.

Over the years there have also been many variations of this theme. Below is a comparison of the sets that could be considered a castle.

Figure 4 Table of LEGO castles and their prices

Source: http://www.classic-castle.com/ and brickset.com
@ No price data available for these castles

Besides the inordinate number of Hogwarts Castles, we can draw similar conclusions from this chart as we can from the Pirate Ship Chart. The prices really have not changed that much in the measurable time-frame2. The weighted average for all the castles is 10.56 cents per piece. As with the Pirate Ships, there does seem to be a general increase in piece count, however.

The general trend seems to be that at least in the last couple decades, LEGO has not gotten any more expensive. Let’s next look a little closer into the price of a brick since 1990.

Figure 5 The price per piece of LEGO since 1990 – Adjusted for inflation

From what our data shows, it seems that the notion that LEGO is increasing in price is false at least in regards to the last couple decades. Since around 2006, the average price of a piece of LEGO has remained relatively stable between 10 and 13 cents apiece.

If the price of individual pieces has not drastically changed, there must be another issue at hand to influence our perception. Another aspect I looked into was the size of the sets themselves.

Increase in set size

With the data from the piece price evaluations I was able to also evaluate the average size of LEGO sets each year. As you can see on the chart below, the average size of sets released each year stayed somewhat constant from 1980-1990 until around 2000 which set sizes started to increase. The average set size seems to have peaked in 2008 (which saw the release of the Taj Mahal), but since then it hasn’t fallen to its pre-2000 levels. It seems to have found a new normal around 300 pieces.

Figure 6 The average number of pieces in a set since 1980

This increase in average piece count could be a factor in why LEGO is perceived to be more expensive now than in the past. LEGO sets have become larger and more complex. They have started to market directly to an older crowd with sets such as the Modular Buildings and the Architecture series. These new sets have rekindled interest in LEGO for an older generation but at the same time, it has introduced this same generation to the relatively high price of LEGO sets.

LEGO is not ignoring the lower priced market, however. As we can see from the chart below, the average price of a set of LEGO has been relatively stable since the 80s2. Even with the average piece count of sets increasing over time, the average price has remained stable. This shows that for all the larger expensive sets being released, they are also releasing plenty of average priced sets that balance out the average. Not only has the size of sets increased but so has the number of sets released per year (prices are in US dollars).

Figure 7 The average price of a set since 1960 – Adjusted for Inflation

Sets released each year

In the last few years, LEGO has had a Renaissance. It has obtained major licenses and broadened its appeal. There have also been changes to the manufacturing process that allows LEGO to expand its product lines and release more sets each year. Below is the chart of the number of sets released each year from 1980-2012:

Figure 8 The number of LEGO sets released each year since 1980

As the number of sets released has increased, the harder it has been for stores to parcel out their shelving space. In order to make more sales, decisions have to be made as to which sets will be carried. Not every store can carry the whole product line (not even all official LEGO stores carry the whole product line). This process will favor the sets that drive sales the most, such as the licensed sets. The traditional boxes of bricks are pushed out of the way for the more profitable lines.

Does a licensed LEGO set run at a premium?

For many, it may seems that the advent of licensed sets3 correlates with the perceived increase in prices. The 1990s and before were a nostalgic heyday of affordable LEGO sets. This is not quite true. Below is a chart that compares the price per piece of licensed sets and unlicensed sets starting in 1999. 1999 is the first year that LEGO had major licensed themes.

Figure 9 Comparison of unlicensed sets and licensed sets since 1999 – Adjusted for Inflation

As you can see, there is no correlation between the licensing of a set and the price of a set. At least from what our chart shows, licensed sets do not carry a premium. Since about 2007, there is virtually no difference between the average price per piece of a licensed set and an unlicensed set.

If the price of a piece of LEGO has remained stable, perhaps the size of the bricks has decreased.

The average weight of a LEGO set

It may be that the price of an individual brick has gone down over time, but what does it matter if the size of the bricks has decreased overtime? Sure, the average number of pieces in a set has increased, but how many of those pieces are tiny details? To answer this question, I compiled all the weight data on brickset.com and compared the sets by their price per gram in a similar fashion to how I compared them by price of piece. Below is the chart of my results (prices are in US dollars).

Figure 10 Average price per gram for LEGO sets between 1980 and 2012 - Adjusted for inflation

As with the evaluation of price per brick, this shows that there has been no overall increase in the price per gram of LEGO in the last 30 years. As with our other metrics, recently the price has become more stable.

Stability in price

In 2004 the LEGO group was in trouble. They were losing money and losing market share to other toys and entertainment products4.  In order to address some fundamental issues in their business, they needed to cut costs. Leading up to this crisis, LEGO bricks had been adding new designs and colors without consideration for the cost to the business. LEGO went through a large reorganization and cut the production of unique elements in half, the variety of colors in half, and the number of suppliers by 80%. This, in addition to an increase in licensed sets and an expansion into video games, saved the LEGO Company.

In reorganizing the company, LEGO became more efficient. The data shows that they have been able to standardize costs and it is likely that they were able to hedge the price of plastic against future price fluctuations. In protecting their business, they have also been able to normalize prices for their customers. A stable price is good for everyone; it helps LEGO ensure that future production costs are budgeted for and it helps the consumer manage their budget. This allows LEGO to protect and grow its market share.

For all the positive aspects, these changes are not without their drawbacks. The LEGO community has been crying foul over the perceived decline in quality of the bricks5. While nowhere as bad as their competitor, any decline in quality reflects poorly on a company known for quality control. The LEGO group has been expanding its manufacturing base to places outside of Denmark, into Mexico, the Czech Republic, and China (although so far it seems only their “signature brand” non-set items are made in China). LEGO claims that this has not changed their dedication to the quality of standards by which they abide. However, it seems that the molds have changed to reduce plastic6.  Whether or not this affects the durability of the bricks is yet to be seen.

What happened to LEGO?

If all the signs lead to the price of LEGO not increasing overtime, then why is there a common belief that it has? I have couple hypotheses:

Children who were bought LEGO as gifts are now old enough to buy it for themselves and for others as gifts and they are surprised by the price. The advent of collectible LEGO sets and the internet has driven the secondary market of LEGO through the roof

Buying LEGO sets as an adult

When we are young, we do not know the value of money let alone the toys we play with. Our parents work tirelessly to buy us the newest, most popular toys and we never realize the effort that went into earning that money. Eventually we get our own jobs and have our own kids. The prices of the toys we had as kids comes as a shock. $150 for a toy? $200 for a toy? These prices are outrageous. It is supposed to be a kid’s toy right? Our eyes may be drawn to the large sets but that doesn’t mean that reasonably priced sets are not nearby. In addition, as I stated before, LEGO has started to market some of their sets to an older audience. That $400 Super Star Destroyer is not for your kid; it is for you. This market didn’t exist 20 years ago.

There is another factor that comes with the sticker shock. As I showed before, LEGO has had $100+ sets for a while. However, only recently have they produced sets even more pricy than that. When we were kids, the $100 set was the pinnacle of LEGO. It was the set we all aspired to own. It was the set we all went straight to at the store. Of course we rarely ended up with that set, but that was our dream.

Now, the dream set is closer to the $400 range. It doesn’t mean that LEGO doesn’t make sub-$100 sets. They do, and more than ever. It just means that in comparison the $25 set looks a lot smaller than it did when the largest set was only $100. LEGO pricing has become a victim of its own expanding market.

The secondary market

The internet can be blamed for the size and scope of the secondary LEGO market. On the website, BrickLink, you can find almost any set that LEGO has ever produced. In addition, the site keeps records of trends in the market and value of individual pieces. This site is invaluable to a LEGO collector and has given many the ability to grow their collections. Before the advent of this site and sites like eBay, collecting LEGO required going to garage sales. There are now whole sites dedicated to buying LEGO as an investment, but that is a topic for another article.

This creation and expansion of the secondary market in conjunction with LEGO now marketing some of their products to an older audience has made the prices of some old sets increase exponentially.  On the extreme range, there is the UCS Millennium Falcon that is selling new for upwards of $2,000 (and close to $1,500 USED!). It sold for $500 new in 2007. Even non-licensed sets can run a premium, such as the Cafe Corner that was one of the original modular buildings. It was $150 new and now it can sell for over $1,000.

Not all old LEGO sets fetch such high prices, but of course all the popular ones do. These are the ones that we wanted when we were younger, and now that we have a bit of our own money we want to buy those dream sets from our childhood. This is, of course until we discover their second hand pricing.

Perceptions of LEGO

LEGO has changed a lot in its history. It started as a wooden toy company before it discovered the benefits of molded plastic. Since the advent of the brick, we have been able to build everything from houses, to spaceships, to working robots. The increased detail and wider product line has allowed for the blossoming of the idea of LEGO as an art medium7. LEGO bricks walk the line between giving people more pieces that can be used to add detail and restricting the pieces to inspire creativity. There is a balance that can be seen through the amazing works, both large and small, that can be done with a bit of patience and an eye for plastic.

LEGO is not a cheap toy and has never been. The brand has stood for nothing but the highest quality and hopefully any issues it has had with changes in manufacturing are only the result of temporary growing pains. Next time you are out buying a LEGO set for a loved one or for yourself, take a second to thank everyone who ever bought one for you as a gift.

-Andrew Sielen, LEGO Enthusiast and former “Brick Specialist” with a Bachelor’s degree in International Business from the University of Southern California. Currently, he has no connection to The LEGO Group® and wrote this as a personal side project.

 

Footnotes

1· To calculate the average price per piece in a year, I took the price per piece of each set made that year, multiplied it by the number of pieces in the set and then averaged all the weighted prices. I used a weighted average because when we are looking at the price per piece we are essentially saying we could buy x number of pieces for y dollars. Larger sets tend to have a lower price per piece so in effect you could get more pieces at that lower price that year. Note: this was done using US retail price data from Brickset.

2· Data before 1980 is lacking. Anyone who can contribute to updating the pricing data on Brickset should to help with a more accurate evaluation. I know there are some people out there with old catalogs that have price info in them. Please do what you can to update the Brickset database.

3· I don’t count the old VW sets or the Samsonite sets as licensed, at least not in the same way the modern sets are

4· For more information about the issues LEGO was facing in the early 00’s take a look at the following articles

5· Articles about the quality of LEGO

6· Examples of Mold Changes

Mold Change Image 1

The brick on the left is the old mold, the one on the right is a new mold. Both of these are from a pick–a–brick wall at a LEGO store.

Notice the one on the right has a more rounded stud than the one on the left, it may be a small savings but it can add up.

Mold Change Image 2

Notice the newer mold on the right has an indent in the tube.

7· Example of LEGO as artwork

Further reading

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