The price of Lego

I guess I should have known this but, for some reason, the US has lower Lego prices than anywhere else in the world.

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.

Guess what? That makes no sense. For starters, the US has had lower prices even when the US dollar was high. Second, on its own Lego on-line store it charges more for Lego in Europe, Asia and Australia than it does in the US (even for on-line exclusive items). Third, it could have something to do with bargaining power of retailers but that doesn’t quite add up with the notion of competitiveness at the retail sector.

If I were to guess, it would be to look at the total stock of Lego in an economy with second-hand market pressure keeping new Lego prices down. But I have no actual data, anecdotal or otherwise, to back that up.

3 thoughts on “The price of Lego”

  1. It could be to do with more competitors in the USA. The Europeans and Australia may be more stringent on enforcing copyright and patent laws and the USA may have many more copycat products.

    However it may be that if Lego attempted to dictate to retailers in the USA then their retail price maintenance laws are enforced and the retailers are able to take them on. It may be that in the USA if Lego tried to give bigger discounts to big retailers it might be illegal in some states whereas I don’t think it is in Australia. This latter idea would be one way of stopping the almost complete domination of Woolworths and Coles in our major shopping centres. That is if the shopping centres were required to charge the same amount no matter which customer it was then it would put retailers on a more even playing field.

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  2. Lots of stuff – consumer electronics is another example – is substantially more expensive in Europe than it is in the USA, I believe. That’s excluding the effect of taxes.

    US retailers might genuinely be more competitive than European retailers, not only running on lower margings but putting more pressure on suppliers. Going out on a limb, might the long history of mail-order retailing in the States (so, even in the most obscure backwoods locations, people had a choice of sellers) have something to do with it?

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