Why the US has the lowest LEGO prices

I’m sure many LEGO fans across the world have wondered why the US has the lowest LEGO prices while countries in Europe and Asia have significantly higher prices, oftentimes twice that of the MSRP (Manufacturer’s Suggested Retail Price) for a LEGO set in the US. There are even countries where LEGO costs up to three or four times the prices in the US. Here is the answer from Mads Nipper of LEGO’s Corporate Management.

Our selling costs in Europe and Asia are higher than in the US because of the size of US market and retailers (economies of scale). Furthermore, the US market is by far the most price competitive in the world. These factors combined mean that we have for years priced our products higher in eg Europe than the US. In recent years, the difference has been increased due to the weakening US dollar – but we have consciously decided not to let this (hopefully short term) weakening of the dollar hurt the US consumer. And in order to stay profitable as a company, we cannot decrease our European prices – especially seen in the light of increasing cost pressure on oil, labor etc. Finally, final pricing in the market place is obviously determined by retailers, which is something we cannot and will not influence.

37 comments on “Why the US has the lowest LEGO prices

  1. minifig

    Interesting that this comment essentially seems to suggest that of late, the European Lego market has been supporting the one in the US through the difficult times of increased overheads and a weakened dollar. I hope the people in the US appreciate what us European consumers are doing for you!

  2. Will Will

    Whatever.

    This is a pile of Bovine Feces. It explains nothing to me. Fuel prices aside, it’s cheaper for me to drive to the States and pick up sets than to drive to my corner Wal-Mart. I’m only 20 mins away from the border! How does that seem right? It’s not shipping. It’s not the US dollar. Can/US is pretty much on par.

    I’m getting a little jaded on how they cater to the US market. Perhaps the sales in Canada, EU, and Aus would increase if it didn’t cost an arm and a leg to buy a licensed set, huh?

    /rant

  3. Andrew

    I think there are two key points in Mads’ comments that are worth emphasizing and expanding on briefly:
    * LEGO is made from oil. ‘Nuff said.
    * Large American retailers — especially Wal-Mart — are aggressively predatory toward their suppliers, including LEGO. An article in Fast Company five years ago gave several shocking examples of how Wal-Mart squeezes suppliers and lures consumers into purchasing things they don’t need. I’ve never shopped at Wal-Mart since.

    Mads’ comments about the price of oil and the “economies of scale” in the American market mask much bigger, macro-economic issues that go beyond the price of LEGO.

  4. Captain Pike

    It may explain the overseas differences but it doesn’t cut it explaining the Canadian price gouge. And TRU is now marking the price up from the MSRP. Hoth Battle is $79.99 CAD – it a $50 USD set. I may buy stuff on remainder or in the US. Or even MegaBolks. I’m not going to pay a 60% mark up.

  5. Doctor Sinister

    Quote:

    “Furthermore, the US market is by far the most price competitive in the world.”

    Hmmm… To me this actually says:

    “We can’t get away with charging higher prices in the US because of the competition, but we can get away with what we like in the rest of the world…thanks for the cash”.

    Dr. S.

  6. Captain Pike

    I actually can spell. I was just so irate I didn’t take the time check my typing. The first time I typed MegaBloks it came out MageBoloks!
    To sum up, high Canadian Prices = Bad. Canadian AFOLs unhappy.

  7. Andrew

    I think this also implies that LEGO is borderline unprofitable in the United States. It’s not that prices should go down elsewhere — prices should go up in the States.

    With the continuing rise in oil costs, LEGO price increases worldwide are inevitable, both as a result of increased cost of goods and transportation. LEGO fans should be prepared to pay more in the future.

    Although everyone’s frustration is understandable, getting angry at LEGO for operating ethically within the bounds of free market capitalism seems to make less sense than directing those feelings at the world leaders who’ve caused the current economic conditions. (Whose wars and economic mismanagement have put the price of oil where it is and tanked the American economy?)

    Like I said before, there are macro-economic issues that are not within LEGO’s control. Americans are lucky to have LEGO at the prices we have.

  8. Pete

    My reading of this is that their pricing scheme is volume-based. The US was priced cheaper and profit was made on the sales volume.

    They are eating the reduced profits from the US for now because they think the dollar will rise again before changing prices would have a meaningful impact.

    However, if it looks like the US dollar is going to remain weak, look for the prices in the US to move closer to the rest of the world.

    I’ve noticed that certain sets are never stocked in Walmart. I’m guessing those sets are the ones that Lego refuses to cave to Walmart on price reduction.

    With Walmart you are only going to get a deal with the first generation of a product that they stock at an industry leading low price. After that, the manufacturer will reduce the quality and/or features of the product in response to Walmart’s demands for further price reductions rather than lose a huge chunk of their sales.

    I have clients that have Walmart-specific versions of their products for just this reason. Even doing this, they have had to eliminate many jobs and relocated certain aspects of their operations to China thanks to Walmart’s price pressure.

    Always check the manufacturer’s product id for the item and make sure it is the same as other, higher-priced stores.

  9. Eric Grant

    When we’re talking about US and Canada price differences, it’s worth considering the rough established price points for various sets in Canada–usually one around $3.50, one around $12.99 in each theme, for instance, not including the licenses. A very few short years ago, when the exchange rate was 60 cents instead of par, that wouldn’t have seemed like such a bad deal.

  10. Chris Weagel

    Want to do something about it? If possible, buy from an independent toy/hobby store, directly from Lego or from a secondary online market like Bricklink. Don’t shop at Wal-Mart or Toys R Us for anything, let alone a Toy they mark up ridiculous amounts.

    I would feel a bit better paying the increased prices to Lego, though if quality had not fallen in so many areas. It’s true that design and piece count has risen considerably – both terrific things I’m greatful for, but they’ve come at the expense of quality. I’ve noticed visibibly deformed and unfinished pieces for the first time in 20 years of using their product. And their packaging, once the best and most useful, is now almost universally awful. Ugly design, flimsy, cheap, destructive to the product (printed materials and stickers etc) and is totally useless for storing the product. In that regard, their recent offerings have been a huge letdown.

  11. Rollen (Lich Barrister)

    There was a bit in the ‘New Yorker’ last year about price differences between the US and Europe for other influential consumer goods. The example used, I believe, was “Halo 3″ – it retailed for ~$50 in the US, and the equivalent of ~$85 (if memory serves). A bit part of that was simply ensuring that a big consumer market consumed, and consumed big.

    For Lego, it’s likely a very similar thing – there’s a need to influence consumers, and probably at young ages. The perceived gain by selling “cheap” now is that the habit of consumption will continue as you age, as well as influence others in the here and now.

    I can’t help but think that all of this is going to change for Lego for many of the reasons noted above, but I also hope that Canadian pricing is amended. If not, I’ll have to start to plan some cross-border excursions in the next year…

  12. Jon Wilson

    Now im no green tree hugger by any means, but if u look at it one way,

    1. Lego ships the product 4000 miles to the US, sells cheap, and then i buy it off US ebay and pay sum1 to ship it 3500 miles back the same way to get it cheaper..

    that just doesnt seem right? the fact that i can pay £30 shipping and get it cheaper than if i was to walk in to my local toy store just seems silly to me..

  13. mulayim

    While USA enjoys cheaper products, we have to pay triple the USA prices in Turkey. Good going, Lego.

  14. Pingback: CoreEcon » Blog Archive » The price of Lego

  15. Marc

    Lego forgets we’re in a global economy and that we can buy bits around the world and ship them home. Australia has stupid prices for Lego compared to the US, so I buy in the US and ship home.

  16. Cashcleaner

    I gotta agree completely with Will Will’s post. I live about 3 hours from the Canada/US border myself and can’t believe how much lower the price is for LEGO sets in Buffalo, NY. And you would think that the cheaper cost of internet sales would be in the buyer’s advantage, but that’s not the case.

    Despite shipping costs for both Canada and the US being roughly the same, and the fact that the Canadian and American dollars are almost at par, LEGO still makes me pay 25% to 30% more for kits bought online.

    Simply put, LEGO’s pricing scheme is a joke.

  17. Will Will

    Yep yep, Cashcleaner!

    I can’t let this topic go. It’s been frustrating me for the better part of a year, and nowhere to vent (most adults don’t care about my LEGO concerns, lol).

    For instance, I just picked up 7666 Hoth Rebel base. It’s a 50 Dollar US set, and all things said and done is costing me 96 Dollars to have it in my hands. Something just isn’t right there. I’m buying direct from LEGO here, and the shipping is the same from Conneticut to Niagra Falls as it is to any other part of the US.

    It’s just a little out of hand here for me. I guess that’s what I’m trying to say. I know there are probably many rational reasons as to why the cost is what it is, but the grim reality is I’m going to have to re-evaluate what collecting LEGO means to me. Truly. Blowing 100 bucks on a mid-size set is just mind blowing. My head hurts, but I get so much enjoyment out of building these suckers.

    I swear they put cocaine in thier bricks, lol.

  18. DekoPuma

    If minifig’s theory is correct, thank you to Europe and other places for helping us shoulder through. Hopefully we’ll make it up to you, somehow.

  19. Rollen (Lich Barrister)

    @ Jacob: Aren’t there usually manufacturer’s suggested retail prices? Don’t they vary from country to country? I know that most any retailer can take their lumps and cut their profits by cutting prices, but few do – there’s simply little cost-effectiveness to be wrought, and it’s usually big-box stores selling Lego these days. (I’m starting to frequent the indie in town, but they don’t have everything.) The local indie has to match prices with the big-boxes, but she’s pretty sure that no one (in Canada, anyhow) is able to gross much on Lego.

    Further to the MSRP, there’s also the simple fact of Shop at Home pricing. Regardless of what’s noted here on Brothers Brick about pricing and sales, when I click on the “shop” icon here, it translates things to Canadian pricing without fail. Undoubtedly, this can be argued as part of the “not undercutting your retailers in a country” issue, but it’s bizarre that there’d be such a leap when books and magazines (the only other regular luxury I buy these days) tends to have discounts to reflect the USD price.

    All there is to do is to wait for the specials on unsold Target exclusives at Zellers, I guess…

  20. mr.M.

    Don’t thank anybody “that they help you pay less besause they are paying more”. Because they (in this case we Europeans) _don’t_want_ to pay such high prices for LEGO. I also ship from US.

    [Again: please don't thank to someone for a thing that he is forced to do.]

  21. RichardAM

    Since returning to the hobby a few years ago, I too have been wondering why it’s always the case Europe gets the higher-pricing. Seeing numerous photos on Flickr along the lines of “I got these sets reduced at $xx.xx” by US fans, naturally, doesn’t help make me feel any better.

    That said, these pricing differences aren’t a new thing, and Lego has always been an expensive product. The Castle sets we see nowadays are sold at pretty much the same price they were when I was growing up, and as this is an interest I get so much enjoyment and excitement from, paying these prices is something i’ve just learnt to accept. Additionally, the prices of everything are higher in Europe than the US anyway, it’s a fact. I don’t see why Lego should be the exception.

    I don’t agree with the practice, but eitherway, I do think this statement by Mads Nipper could’ve perhaps been worded better.

  22. teikjoon

    I think the biggest shame is that because LEGO is more expensive in these places (like mine), a lot of potential builders, young or old, are not exposed to LEGO, or cannot afford to pursue it and go on to do other less productive endeavours…

    God knows how many unborn MOCs are out there. Sigh.

    Sadly, economics is a game which we all have to play, whether or not we like it. Personally I try to buy smaller sets which give me a good mix of parts, and try to build small-ish MOCs, supplemented with a story.

    In my case, I paid USD130 for the USD90 Market Street, and based on my relative purchasing power…that amount would have paid for about 100 lunches…

  23. SuperWAGs

    I think it it outrageous that not only are other parts of the world required to pay more for the actual sets, but also the steep cost of postage to get it here. It really is discouraging to buy sets in Australia from shop at home, when many of the stores undercut or match (or undercut) the S@H price and then you have to spend an extra $75 to get them to your door. I bought the green grocer in the first week of release when I noticed it was priced at parity with the USD price (a mistake soon corrected). I felt like I had a little victory. To Lego’s credit though they still stood by the sale and didn’t try to weasel out of it.
    I design quite a lot of stuff in LDD, but I’m very cautious to submit the designs to S@H, first looking at whether the bits I have can do the job. Getting onto that… it seems in upgrading LDD they have taken out the piece list function, so it makes it harder to find an alternative source for bricks.

  24. mediocre

    Yeah, I’d like to buy directly from TLC too, but there’s another thing: a lot of sets aren’t available for me here in the Netherlands through show.lego.com. It’s the US market that seems to get the most different sets.
    If they can sell it to me at those higher ‘European’ prices, why won’t they sell it to me then? You’d think they could make more profit.

  25. Peter

    Man, I had no idea the rest of the world was getting hosed so badly. Too bad the article did nothing to indicate what part taxes play in the pricing. I’d like to see that info. For example, we’ve been griping about our $4 gas for a while, but across the pond I know ya’ll pay double or more for it. But a lot of that double is taxes. The gas tax in the U.S. is relatively small.

    I wonder if it’s similar with Lego; not that it nullifies the pain, but at least it might give some kind of explanation other than ‘market forces.’

    Stupid Wal-Mart. A friend of mine showed me how they squeeze their suppliers a few years ago. Some of the efficiencies gained are worth the pain, but having a retailer dictate the price of your product is just wrong.

  26. Vanquished

    I’ve been quietly grumbling about Canadian prices for quite some time. I emailed Lego about it, and they told me Canadian prices were based upon the strength of the Canadian dollar based over recent years, although it seems anytime someone asks they get a different answer. I can only wonder if in a few years we will get a better price. Nowadays I don’t even buy new sets anymore, everything is through bricklink or ebay.

  27. Mr. S

    Even given the lower volume in other markets, Mads Nipper’s explanation doesn’t really justify items costing at least double their U.S. counterparts. Especially when you cut out the middle-man by buying from shop.lego.com.

    Peter, we pay 25% VAT on most items. SRP for 8527 (LEGO Mindstorms NXT) is SEK 2 999:- on shop.lego.com (if I log-in from a Swedish IP). If I login with a U.S. IP address, SRP for that same set is USD 249.99 or SEK 1 585:84. With Swedish VAT, that would be 1 982:30.

    It gets worse with the educational sets. Since there’s no official LEGO Education store here in Sweden, LEGO’s partner charges schools $685 for set 9797. That set retails for $260 on legoeducation.com.

  28. Sam

    This is bullcrap. The Agents Volcano Base goes for $94.99 up here in Canada and $69.99 in the US. The latter is equal to the price of the Lego Batman Tumbler up here in Canada! You mother******* sons of *******! You can all ******* **** yourselves and go ********* into a ******* pool of your own ******* ****!

  29. Donaldo

    The bottom line is supply and demand. Complaining about price does nothing. You don’t like the price don’t buy the product. It really is that simple.

  30. tkf

    You also shouldn’t forget about Russia. We have even less choice than other Europe countries. It is not hopefull feeling when you see great set, but it just won’t come to Russia. We have no official Lego store here. And couldn’t order from lego.com.
    Thankfully prices just 2 or 3 euros higher than in europe for small and mid sets.
    NXT’s price just 100$ bigger than is USA :(

  31. Steve Howard

    You have misunderstood their point regarding the economy of scale. It can be said more are sold in California alone than in the entire UK combined, and 49 more states to go in the USA. Do the math, UK is a rain drop in the ocean compared to the USA in just about all product sales. Volume reduces price, simple economics.

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