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When do you think prices will come down?

TownTown Member Posts: 68
edited April 2011 in Buying & Selling Topics
Lego seems to be one of the more expensive toys to collect. Still not as bad as Playmobile, in my opinion!

My prediction is that the only way prices will come down is if it stops being as popular, or if other brands are competitive in the marketplace and drive down prices.

[edit : moved to "Everything else LEGO"]
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Comments

  • Cam_n_StuCam_n_Stu UKMember Posts: 368
    I be tempted to say "they won't" unless one of two things happen...

    1) If its popularity declines again. This unlikely with pull thru generated by the licensed sets at the moment.

    2) A credible alternative appears. However any competitor has to overcome the inertia of all that lego already out in the wild or come up with a compatible system that they can defend in court. If you were a toy maker would you really pick a battle with Lego - an acknowledged design classic where people already pay for a quality product?
  • atkinsaratkinsar Member Posts: 4,272
    edited April 2011
    I can't see prices coming down, what with inflation being out of control (in the UK at least). IMO, the best we can hope for is that prices stabilise for a few years, so the 'real' cost of buying LEGO comes down.
  • bluemoosebluemoose Member Posts: 1,716
    edited April 2011
    The problem is, fundamentally, that demand is so high that LEGO can sell pretty much every brick they make. Which means that 'the product is undervalued in the market' ... in order to maximise income, they need to increase the cost to the user to reduce demand, until the two balance out. While demand is high, prices will stay high.

    The good news is that LEGO are increasing their production capabilities (the plant in Mexico is being expanded to near triple production). Hopefully that should mean that prices will drop a little after it comes on-stream (and LEGO will still make more money overall).
  • brickupdatebrickupdate Member Posts: 1,020
    I have to say, it's astounding how often I hear adults mention LEGO in conversation as I walk past them; have people tell me their kid/grandkid LOVES LEGO more than any other toy; and any time I visit the LEGO aisle at a store, there are always kids/parents there, not just buying, but purchasing. I saw this a lot even in January, when I figured kids would't be getting many new LEGOs. I think that there is just so much momentum behind this brand. I've collected other toys before - I've never seen anything like the brand awareness that LEGO has. Going to any LEGO Store proves that - always packed, and not just with lookers, but with buyers. Prices will remain where they have always been: more expensive than we would like, but not out of reach for the average buyer.
  • PaulTRPaulTR Member Posts: 115
    Considering TLG is the fourth largest toy maker in the world and the fact that they are pretty much the only toy maker not losing money in this sluggish economy, I dout prices will come down. As much as I dislike the higher prices, however, it's good to see TLG expanding and learning from their mistakes (1990s: Near bankruptcy of the company. 'Nuff said.) However, what really surprises me is the price hike, which to my knowledge first manifested itself in the Phontoka Bionicle line, occured in 2008, right when the markets crashed and burned. Despite that, TLG has still managed to make a profit AND raise their prices! I find that quite interesting.
  • haqq17haqq17 Member Posts: 1
    Chances are they won't come down. Lots of people will buy them, not matter how expensive. I, for example, would get the new Hogwarts Castle if it was 200 dollars. Lego, as would any company, is taking advantage of their popularity by making expensive sets. A lot of people prefer 10 cents per piece, though, and a lot of sets are like that. Some 2000 piece sets are 150 dollars, which is almost like 500 'free' pieces. The prices could come down, though, if some rival got more popularity, but I doubt that, because a lot of people who have tried other products as an alternative (me) think they are cheap quality.
  • prof1515prof1515 EarthMember Posts: 1,561
    edited April 2011
    Prices won't come down. What Lego will do is probably resort to even more BURPs again or switch to the cheaper production quality seen in the magnets sets if they try to reduce prices. Do we really want that?
  • MisterFubarMisterFubar Member Posts: 4
    I don't expect prices to ever come down, but I would like the value of my dollar to go up. Not expecting that to happen either.
  • MatthewMatthew Cheshire, UKAdministrator Posts: 3,734
    I don't expect prices to ever come down, but I would like the value of my dollar to go up. Not expecting that to happen either.
    Well I'd like the value of the Euro versus GBP to go up as most of the Bricklink sellers in my 'good books' are in Europe.

    (I doubt it's going to happen though)
  • brickmaticbrickmatic Member Posts: 1,071
    Prices will not come down. LEGO still needs to be competitive. One of the reasons LEGO is expensive is because of the quality of the product costs more. The only way I'd see prices go down is if the costs of production went down. The easiest way to do that would be to move production to a low-cost country, like China. You already see that with some parts actually. Many people are displeased with that move for quality reasons. Another way to lower costs would be to reduce costs by lowering tolerances on the product. This would directly lower quality and you do not want that to happen.
  • rocaorocao Administrator Posts: 4,288
    As @bluemoose said: Lego is essentially selling every brick they make. So this would indicate that demand is outpacing supply such that price has room to increase before reaching an equilibrium. I think the more correct (and interesting) question is what is that equilibrium point? In other words, if we assume that Lego is producing as much as it can and has no plans to increase output, how high could they push the price/piece ratio before revenue declines due to a decline in demand?
  • knuclear200xknuclear200x Member Posts: 45
    I believe the only time the price of Lego goes down, is when stores WANT them to. I personally by most Legos at TRU when they have that BOGO 1/2 off or the "Spend this much and get this one free" sale.
  • atkinsaratkinsar Member Posts: 4,272
    I think the prices would have to be ridiculously high to deter the likes of us, so it's probably more a question for the causal LEGO buyer, what price point would see a decline in demand from them. TBH, I'm surprised we're not at that point already.
  • drdavewatforddrdavewatford Hertfordshire, UKAdministrator Posts: 6,380
    I think the more correct (and interesting) question is what is that equilibrium point? In other words, if we assume that Lego is producing as much as it can and has no plans to increase output, how high could they push the price/piece ratio before revenue declines due to a decline in demand?
    Yep - that's the REAL question ! How high can the prices go before demand matches supply ? I fear we haven't seen the end of the price rises yet.......

  • jwsmartjwsmart Member Posts: 298
    edited April 2011
    In other words, if we assume that Lego is producing as much as it can and has no plans to increase output, how high could they push the price/piece ratio before revenue declines due to a decline in demand?
    From what I remember of the annual report & accompanying video that was posted a couple of months ago, they spent a lot of time on how much they were growing in each market area. I doubt that TLG has decided to stop expanding.

    After all, what's the one thing that the 4th largest toy manufacturer in the world wants more than anything else? To be the 3rd largest toy manufacturer in the world, of course.
  • rocaorocao Administrator Posts: 4,288
    ^ Yes, I think they will continue to try to expand. I was speaking hypothetically in order to make fixed the variable "producing as much as they can". I believe we have seen Lego test both limits -- their production ability and their price point.
  • bluemoosebluemoose Member Posts: 1,716
    Historically, demand for LEGO goes up in a financial down-turn ... rather than spending small amounts for cheap throw-away toys (often quite frequently), parents & grandparents seem to be happy to spend money on toys that are of a higher quality, that can be reused, that can be handed down to younger brothers & sisters ... basically that keep giving back. Also LEGO is classed as an educational toy, so parents & grandparents see it as an investment in the child's development. Maybe it will encourage little Johnny & Sally to become engineers, scientists, doctors ... it's also the economic uncertainty that tends to get people a little nostalgic for the 'old days' when they were children & didn't have lots of worries. Sales of teddy bears go up in a recession too ...

    LEGO know it won't last. As soon as people start feeling a little more certain about the future, and have a little more spare cash floating around in their pocket, they'll go back to buying disposable toys & video games. LEGO are just making the most of it while things are good for them. Instead of creaming off the profits, they are reinvesting the money in new production plants, new moulding & printing technologies, etc., so when things do slow down a bit for them, they can reduce the cost to the end customer & still make a nice, but smaller, profit
  • Si_UKNZSi_UKNZ NZMember Posts: 4,179
    edited April 2011
    move production to a low-cost country, like China. You already see that with some parts actually. Many people are displeased with that move for quality reasons.
    There's no reason this has to reduce quality per-se, its just about how the quality is managed.
    Historically, demand for LEGO goes up in a financial down-turn ... LEGO know it won't last. As soon as people start feeling a little more certain about the future, and have a little more spare cash floating around in their pocket, they'll go back to buying disposable toys & video games. LEGO are just making the most of it while things are good for them.
    Agree with this partly, but with one caveat - I do wonder if there's a longer-term backlash against video games now, as parents start to realise the damage they do to kids (addiction, obesity etc), and so return to toys like Lego which aren't as damaging, and are more familiar to them too.

  • prof1515prof1515 EarthMember Posts: 1,561
    edited April 2011
    Actually, video games and other forms of entertainment like movies tend to be one aspect of consumerism which isn't affected by economic hard times. When the economy takes a downturn and people tend to suffer, they seek out entertainment more than they would otherwise. It's the escapist quality of entertainment that increases the appeal when faced with the hardship of reality. The greatest years for movie revenue (adjusted for inflation) were during the Great Depression and the box office these last few years hasn't been too shabby either.

    Now, Lego wouldn't qualify as entertainment so they might be experiencing some downturn with the economy but there's little reason to believe that they'll reduce prices when the economy picks up. After all, if people will spend X amount in bad times, why won't they spend X+Y when they have more money?
  • brickmaticbrickmatic Member Posts: 1,071
    edited April 2011
    There's no reason this has to reduce quality per-se, its just about how the quality is managed.
    You're right. On the other hand, we have seen lower quality output for parts made in China.

    Most work is automated. The quality of the product reflects the quality of the molds. You'll want skilled and dedicated technicians putting extra love into caring for those molds. In Billund, many of the workers have been at the same plant through generations. Something to be said for being in the family business.
  • bluemoosebluemoose Member Posts: 1,716
    ... so they might be experiencing some downturn with the economy ...
    Sales of LEGO are up over 40% over the last 12 months. They were up ~30% above the previous year, and ~25% over the year before that. LEGO are having some of their best sales years ever.

    There's a big difference between people buying video games for themselves & people buying video games for children as gifts.

    As I said, the toy Industry's own figures show that people tend to buy higher quality toys during a recession, & more lower quality (disposable) toys in good times. More money gets spent overall on toys in better financial times, but in a recession the quality toy market gets a much higher proportion of the overall toy market.
  • prof1515prof1515 EarthMember Posts: 1,561
    edited April 2011
    ... so they might be experiencing some downturn with the economy ...
    Sales of LEGO are up over 40% over the last 12 months. They were up ~30% above the previous year, and ~25% over the year before that. LEGO are having some of their best sales years ever.

    There's a big difference between people buying video games for themselves & people buying video games for children as gifts.

    As I said, the toy Industry's own figures show that people tend to buy higher quality toys during a recession, & more lower quality (disposable) toys in good times. More money gets spent overall on toys in better financial times, but in a recession the quality toy market gets a much higher proportion of the overall toy market.
    You seemed to have missed my point. Arguments that Lego's higher prices are tied to the economy and thus the belief that the prices will go down with economic recovery are without merit. Consumer buying patterns, as you illustrated, do not conform to less money equalling less purchases and hence increases in the cost of Lego do not result from the economic recession. I used movies as an example because I have done historical research on that in the past.

    Lego's prices aren't going up because of the recession nor are they going to go back down when the economy picks up. It's also very unlikely that consumers can change that so those upset with the rising cost have but two options: pay more or stop buying. Anything else is just hot air.
  • bluemoosebluemoose Member Posts: 1,716
    Anything else is just hot air
    No need to get personal. I'm very confident in my analysis of historical trends in LEGO sales during varying economic circumstances; I'm also very confident that LEGO believe this too & it drives their own business strategies. You are of course free to believe whatever you want, just keep it civil.
  • prof1515prof1515 EarthMember Posts: 1,561
    edited April 2011
    Anything else is just hot air
    No need to get personal. I'm very confident in my analysis of historical trends in LEGO sales during varying economic circumstances; I'm also very confident that LEGO believe this too & it drives their own business strategies. You are of course free to believe whatever you want, just keep it civil.
    That's not getting personal. I'd like to see the evidence of "historical trends in LEGO sales during varying economic circumstances" which is relevent to the present.

  • Si_UKNZSi_UKNZ NZMember Posts: 4,179
    edited April 2011
    "just keep it civil".
    I agree.

  • indy1973indy1973 Member Posts: 70
    edited April 2011
    @ bluemoose, @ rocao, et al...

    Yes, you all make excellent points, but here is *one more twist*...

    LEGO could easily increase it's prices a lot more, but if they did that, then the average consumer would cross a threshold in "brand perception" and start to perceive LEGO Bricks as an unattainable "luxury brand" (like Dom Perignon champagne or Beluga caviar) and they would simply force their kids to settle for clone brands.

    Lego obviously wants to maintain their dominating popularity and market share by keeping the prices generally within reason, and making sure that even poor kids can have real LEGO sets too...!
  • indy1973indy1973 Member Posts: 70
    edited April 2011
    i.e., They obviously don't want to "kill the Golden Goose by squeezing it too hard"! =)
  • TownTown Member Posts: 68
    Anything else is just hot air
    No need to get personal. I'm very confident in my analysis of historical trends in LEGO sales during varying economic circumstances; I'm also very confident that LEGO believe this too & it drives their own business strategies. You are of course free to believe whatever you want, just keep it civil.
    That's not getting personal. I'd like to see the evidence of "historical trends in LEGO sales during varying economic circumstances" which is relevent to the present.

    I agree that's not getting personal. His point is that there's no use complaining about high costs when the only thing you can do is vote with your dollar. If it doesn't make sense economically, no company is going to keep doing it. After all, every company in the world wants to maximize profits.

    I tend to slightly disagree about voicing my opinion on price. If that voice isn't out there, there's no chance of the company knowing one or several of their customers feels that way, and there's no chance of perhaps one or some of their employees speaking up when it comes to the price point on a set. Hopefully I'm not hoping for too much there.

    $0.10 per piece is probably the max I would spend on a set now (I'd have to think twice before purchase), but I would much prefer it at around $0.06. Depends on the type of pieces too.
  • brickmaticbrickmatic Member Posts: 1,071
    @the_real_indy Well said. I'm sure they don't want to be known as that expensive toy and much rather be a good value for your money. Another twist to keep in mind is price discrimination and market segmentation. I have a sense that LEGO is positioning some themes into a high price segment (e.g. Architecture and Collectible Minifigs) and other themes into a low price segment (e.g. Creator). It would make sense for them to differentiate their product lines for marketing and pricing purposes and to achieve the highest revenue without hurting their brand.
  • YellowcastleYellowcastle Member Posts: 4,401
    edited April 2011
    Anything else is just hot air.
    I'm not sure how this wouldn't be taken personally. But that not withstanding, it has been a great discussion so far.

  • rocaorocao Administrator Posts: 4,288
    edited April 2011
    LEGO already is an expensive toy, and it's recognized as such.

    I'm not suggesting that TLG is trying to deliberately find that tipping point where an increase in price actually results in lower revenue due to reduced sales, but the prices certainly are trending higher. My question was more along the lines of: hypothetically, at what point will we as consumers decide the prices are too high?
  • brickmaticbrickmatic Member Posts: 1,071
    edited April 2011
    It's also very unlikely that consumers can change that so those upset with the rising cost have but two options: pay more or stop buying. Anything else is just hot air.
    If my reading of this is correct, the hot air was referring to consumers upset with rising cost complaining about rising prices talking about prices falling back down. If that is correct, then it isn't personal because 1) it refers to a general situation 2) isn't referring to previous comments and 3) doesn't seem particularly tied to the posters in this discussion.

    That said, I disagree with @prof1515 and think the rising prices ARE linked to the general economic situation in that the economic situation stimulates demand for LEGO products which then is reflected by rising prices.
  • indy1973indy1973 Member Posts: 70
    edited April 2011
    ^@brickmatic,

    Exactly! You can get a *500 PIECE* tub of Creator Bricks for $10, or 2 cents per brick...
    Or you can get the Architecture Line Guggenheim Museum for 19 cents per brick!
    Your choice, kids! LEGO obviously has their market segmentation all figured out...
    I think people who complain about the prices are just addicted to buying multiple sets!
    "Everything in the world is worth what its purchaser is willing to pay for it." - Publius Syrus, 1st cen. B.C.
  • brickmaticbrickmatic Member Posts: 1,071
    LEGO already is an expensive toy, and it's recognized as such.

    I'm not suggesting that TLG is trying to deliberately find that tipping point where an increase in price actually results in lower revenue due to reduced sales, but the prices certainly are trending higher. My question was more along the lines of: hypothetically, at what point will we as consumers decide the prices are too high?
    At every point. I'm sure there are many people right now dissuaded from buying LEGO because of the price. By the same token, evidenced by prices in the secondary market (e.g. Ebay), there are people willing to pay a whole lot more for LEGO. The best case scenario from the perspective of LEGO is to set the price to match everyone's willingness to pay. Of course that's impossible, but they will do their best to find the balance that extracts the most money overall.

    Now, if you're asking whether they are going to raise prices to the point that you get massive consumer backlash, i.e. consumers decide the prices are too high, I don't think they are going to do that. More interestingly, I think it would take a lot for that to happen. Most fans of LEGO are pretty hard core and love the company. It will take a lot to erode that brand loyalty to the point we get truly upset. As for casual consumers of LEGO, they'll just quietly switch to cheaper products.
  • YellowcastleYellowcastle Member Posts: 4,401
    edited April 2011
    If my reading of this is correct, the hot air was referring to consumers upset with rising cost complaining about rising prices talking about prices falling back down. If that is correct, then it isn't personal because 1) it refers to a general situation 2) isn't referring to previous comments and 3) doesn't seem particularly tied to the posters in this discussion
    @brickmatic - While that's not the way it read to me, your interpretation certainly seems as likely as mine. Of course, either way comes across as dismissive, if not judgmental, and that's how great conversations always seem to get derailed.
  • brickmaticbrickmatic Member Posts: 1,071
    ^ Oh I think I read it like you did at first, that it was referring to previous comments in particular. But when it was said that it wasn't personal, I looked at it again and this other way seems to be the intended meaning. Anyways, I don't like seeing people taking things personally. And it would be unfortunate if miscommunication caused hard feelings, figured I'd point out there are other reasonable interpretations.

    You're right though, divisiveness is bad. Thankfully, I am liking this overall conversation very much! :)
  • prof1515prof1515 EarthMember Posts: 1,561
    Hot air means meaningless dialogue that doesn't have any impact because it's not backed by actions. So, yes, brickmatic is correct when he said that I'm referring to consumers speaking louder with their wallet than with their mouth having a much greater impact. As long as people complain but are willing to shell out the cash, any business including Lego will look at the money first and foremost. It wasn't intended as personal or divisive.
  • TownTown Member Posts: 68
    My own position on it is that Lego has been putting out some really cool stuff in the last few years- I personally don't make that much though, so I have no choice but to pay their high prices because as we all know, the price of Lego appreciates incredibly over time, so it's buy now or really pay later.

    I'm not at a point where I'm going to give up collecting because of high prices, but I'm at the top of what I'm willing to pay for some lines. I'd love a slight reduction. Not a lot, but 10-20% would really be great and not unreasonable in my opinion. That said though, I have no idea in what kind of profit margin they're making.
  • LuciusMalfoy7LuciusMalfoy7 Member Posts: 107
    LEGO prices won't come down at all. Demand is high, and in many people's opinions it is both a classic, creative, educational, high-quality toy as well as being something kids just love.
  • legoDadlegoDad Member Posts: 529
    Can't see where they'll lower prices, especially with oil being so high.
    I'd like to see though an increase in Vip point percentage to help in this matter. Instead of $5 for every $100 spent, raise it to $10. I think it'll also increase sales overall as well.
    Just a thought...not sure if it's reasonable.
  • TownTown Member Posts: 68
    Isn't the UK's VIP point system better? I seem to recall that the amount of cashback received is higher...
  • Coder_XCoder_X Member Posts: 29
    Here in Belgium there's a store that offers 5% on your second purchase, 10% on the next 15% on the next after and finally 20% on the 5th purchase. Then it starts over from 0.
    But the point is. you can buy 4 minifigs and a large set and still be cheaper as buying the large set alone… I don't think they thought this through :-D

    I don't see prices going down anytime soon… I don't even think that there is anything in this world that can make prices go down. Maybe some bad publishing like exploding bricks, or something like that, but I sincerely doubt that will happen ;-)

    I was looking at the prices on the online lego store and I compared them with the prices in my local store and the Lego store is more expensive… does anyone have any idea what the reason for that can be? They're right at the source, there prices should be the lowest in the universe…?!?
  • Si_UKNZSi_UKNZ NZMember Posts: 4,179
    I think the Lego store sometimes make them ridiculously high, so every other shop looks like it's producing a discount. For instance the new 7287 police boat was in the shop at £30 on launch, and every single shop here in the UK sold it for £20 (advertising a £10 'reduction' from RRP). There's no way it's worth £30, so this seems like a marketing scam to make you feel like you're getting a discount. Eventually the price in the shop dropped and is now at £20 there.
  • madforLEGOmadforLEGO Chicagoland USMember Posts: 9,513
    Lego prices will stay up for a few reasons noted above AND for one other which I think has been omitted..
    Production of Plastic..
    With Oil prices doing nothing but climbing it is getting more and more expensive to build little anything out of plastic.
    That being said I think others have also hit it on the head when they said the playability is constant.. it is hard to get bored with Lego's.. it really is...
    Also, I do not think Video games are bad, or that parents see them that way. I think it is because there has not been an original video game produced in about 20 years (excluding Wii of course, but even then that becomes a tired novelty after some time) I mean almost EVERYTHING is a first person shooter nowadays and WHY pay $50-60 dollars for a game your kid just beat ('Now introducing Halo 86') with the exception for a few games, including the Lego ones (thank god for those) I find my XBox360 gathering more dust than my Lego's.
  • rocaorocao Administrator Posts: 4,288
    edited April 2011
    I was looking at the prices on the online lego store and I compared them with the prices in my local store and the Lego store is more expensive… does anyone have any idea what the reason for that can be? They're right at the source, there prices should be the lowest in the universe…?!?
    LEGO has a commitment to its distributors to sell the sets at its suggested retail price. It wouldn't be fair or good for business relations to have a purchase order agreement in place, and then undermine their ability to sell it by undercutting the prices.

    Even still, I do agree that the LEGO VIP rewards program should be more generous considering the profit margin they have on sets they sell directly.
  • pantenkindpantenkind Member Posts: 258


    Even still, I do agree that the LEGO VIP rewards program should be more generous considering the profit margin they have on sets they sell directly.
    Also considering you can buy the sets on Amazon without paying shipping or taxes. Example, I just bought the maersk train and going through amazon I saved basically 33.00, as opposed to the 7.00 I would have got back in vip points. A no brainer for me. LEGO gets the sale either way I guess, but I agree, the points should be a little better to offset this kind of situation.

  • rocaorocao Administrator Posts: 4,288
    edited April 2011
    ^ That's a unique situation because retailers without a physical presence in a state are not required to collect state sales tax upfront. I say upfront, because though many people don't realize it, we're required to pay this use tax after the sale.

    We consumers obviously benefit from it, but I think brick and mortar retailers are right in protesting it as it gives these "out of state" businesses a distinct competitive advantage.
  • pantenkindpantenkind Member Posts: 258
    Yep, and for any of you IRS employee/LEGO fans that may be reading this...I always pay my use tax on all purchases!!! :-)
  • gamermicgamermic Member Posts: 8
    Is Lego listed?
  • YellowcastleYellowcastle Member Posts: 4,401
    @rocao - you make a great point about the tax situation but Amazon does have the great ability to leverage its transportation relationships to get you free shipping. For those collectors not close to a Lego Store or for those sets not usually in stock (I'm talking to you Road Plates), free shipping can be a big deal.
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