Quality goods come at a premium price for consumers…
LEGO® is the greatest toy that has ever been invented. Having been around for over 90 years, the group has perfected the product, the audience, and the process. It is now the perfect toy, built for everyone. LEGO® is made of a highly durable and long-lasting plastic, which also drives up the price. Let’s explore why the brick itself is expensive, and not solely expensive due to scarcity issues like the expensive LEGO® Lord of The Rings theme. Curious about what LEGO® even stands for? That’s a fun rabbit hole too.
The Cost Of Production Or As We know It, Overhead Costs
LEGO® follows a 5.63 Sigma production process. In supply chain management, this means that LEGO® does everything within its power to control and limit defects within its sets. The company is devoted to quality assurance and ensuring LEGO® is made without any errors. Paying QA managers and having high-functioning equipment is an expensive process. Couple this with inflation, and you have to front the costs into the price of LEGO® sets. This means that LEGO® sets are going to be expensive, but each time you buy, you are getting an exceptional set.
Let’s Get Into The Economics Of A LEGO® Set As A Consumer Product
Price elasticity is the measure of how much demand for a product changes due to its change in price. Looking at LEGO® holistically, the LEGO® brick has been pretty inelastic. The main reason: LEGO® set prices have been increasing, profits have been growing, and consumers are buying more. So regardless of the set price, LEGO® can and will charge a premium for an outstanding set. Also, it is important to note that LEGO® has had high demand and lacks any real competitors. No one holds a candle to the perfect toy. Who is Mega Bloks anyway?
Branding Can Define Your Prices
LEGO® has built the entirety of its reputation around quality. When any parent, loved-one, or friend goes in to purchase a LEGO® set you know exactly what kind of toy you are getting: a good one. Anyone who buys LEGO® is 100% sure that this set means what it says, and says what it means. You are going to get a box of pristine-fun.
However, going with another toy? Good luck. You never know…
The Big Three In Business
In typical business mantra, you get to pick two of these three: 1) It can be done well 2) It can be done fast 3) It can be inexpensive.
With LEGO® they chose two and they chose right. They go after the LEGO® sets being executed perfectly and LEGO® sets being shipped to you quickly. The sacrifice is point 3. Therefore, LEGO® sets are expensive and will always come at a premium. And once they retire a set, the aftermarket only pushes that premium higher.
With Prices On The Rise, Are Expensive LEGO® Sets Worth The Buy?
You bet your bottom dollar. LEGO® is a timeless toy. It is expensive because it is the toy. With LEGO® investing branching into a full-fledged side hustle and the company selling more sets than ever, the more LEGO® you have, the better! Still not convinced it’s worth the cost? Check out why LEGO® is actually a great hobby even if it’s expensive.
