The different prices on LEGO in the US vs. Europe

[SuvieD]

Shop at home if I remember correctly is not a direct portion of the TLC business but is a separate entitiy.

One thing people often forget is also to account for is product saturation and demand and not just costs.

90% of homes in Germany already have LEGO products in them whereas the US has something closer to 35% of homes. Which means LEGO needs to have a greater quantity ata lower price to make it available to more people in the US, whereas EU is already a saturated market. If LEGO can get in more homes and establish themselves as the best construction toy available then I would think prices would begin climbing to match EU prices. As it is there are six aisles of construction toys at TRU and only two are LEGO, which means there are still four ailses of lower priced competition that LEGO needs to outsell. If prices were equal to the EU price it would take three years for all of it to filled with clones and competitors while LEGO would only be found in imports shops at insane prices. And with lower profitable markets, guess whos prices would go up.

Demand for new products in Europe is obviously high enough to warrant a higher price. The basics of economics is price your product to meet your demand. Ideally that means pricing items at just high enough that they all sell. Europe in general is still willing to pay the prices LEGO has, they are not going to lower prices until that changes.

Another thing to remember is that wages in the US are much lower than in EU. I could be wrong but I would say that 70% of people in the town I live in make less than $20 per hour and after taxes and other paycheck takeouts they end up with something closer to $14 per hour take home or less. Which means that there are nearly 84,000 people living in my area make between 3.90-8.40 Euro per hour.

Tell me that wages in the EU are that bad and then you will have my sympathy.

[julencin2000]

Those official explanations doesn't explain why Amazon shipping is so cheap compared to Shop @ Home shipping.

In case of Spain, Amazon.de ships for only 6 euros. S@H doubles this quote. Why?

[Kamzel]

Another thing to remember is that wages in the US are much lower than in EU. I could be wrong but I would say that 70% of people in the town I live in make less than $20 per hour and after taxes and other paycheck takeouts they end up with something closer to $14 per hour take home or less. Which means that there are nearly 84,000 people living in my area make between 3.90-8.40 Euro per hour.

Tell me that wages in the EU are that bad and then you will have my sympathy.

In Poland the minimal wage is 2 Euro per hour, the medium is around 5-6 Euro, and that is before taxing, social security, etc... which takes 20-40% of your income. Still, LEGO bricks are usually more expensive here than in Germany & the rest of Europe, and this is getting even worse as Polish zloty is getting stronger and stronger in the last two years. Luckily, some Allegro.pl (our auction site similar to eBay) sellers buy sets in Germany so that e.g. 7094 castle is now available here for around 90 Euro. But for the first few months it was like 110 euro or more. I can only hope that the recently announced Polish S@H will have decent prices...

[The Cobra]

Tell me that wages in the EU are that bad and then you will have my sympathy.

I've been working as clerk in the same company since March '96. My net monthly wage is about 1200/1250. If we have 21 working days, 8 hours per day, it means my wage is 1250/(21*8) = 7,44 €/h.

[brickzone]

Another thing to remember is that wages in the US are much lower than in EU. I could be wrong but I would say that 70% of people in the town I live in make less than $20 per hour and after taxes and other paycheck takeouts they end up with something closer to $14 per hour take home or less. Which means that there are nearly 84,000 people living in my area make between 3.90-8.40 Euro per hour.

Tell me that wages in the EU are that bad and then you will have my sympathy.

It's not as simple as wages either. Minimum wage in Ireland works out to a seemingly impressive €1500 pm. However, in Dublin, rent alone would be half or even the majority of that amount. Also many people don't get minimum wage (temporary worker, "in training", dodgy employer). Motoring is not really an option on minimum wage, and public transport is so bad that in many cases it is not an available option. You may have to buy your groceries at a more expensive small local outlet or pay €20+ for return trip (possibly every week) by taxi to a real supermarket. Costs to get to work may be significant as you may not be able to afford accommodation near work, and you may have a tough time coping with paying for transport+accommodation.

[PJSKittles]

I get in a lot of europeans into my store spending $100+ on lego sets and then just sending them back home. Since the pound is almost double the dollar, they can buy pretty much everything for "half price"

[Anubis]

It makes a lot of sense, actually, because in America Lego must compete with the lower prices of copycat brands like Mega-Bloks. Making sets cheaper in america gives americans the option to buy higher quality at the same price, if they made it higher, American buyers may switch to clone brands.

I've been working as clerk in the same company since March '96. My net monthly wage is about 1200/1250. If we have 21 working days, 8 hours per day, it means my wage is 1250/(21*8) = 7,44 €/h.

7,44 EU is about 22.32 USD, more than 20 USD an hour, which is pretty generous in America.

[Shoc]

It makes a lot of sense, actually, because in America Lego must compete with the lower prices of copycat brands like Mega-Bloks. Making sets cheaper in america gives americans the option to buy higher quality at the same price, if they made it higher, American buyers may switch to clone brands.

Firstly, Megabloks is available in England, and probably other European countries, so that's no excuse. Also, there are many clone brands available in most countries, so America's not that different from Europe in that sense.

:skull:

[Anubis]

Your forgetting that the wages and such in the U.S. are different. It's terrible going to visit my family and friends in Switzerland (I'm staying in the U.S. right now) and having to pay a days wage on a cup of coffee or a decent amount of food. The prices are fair. In Europe average people make more money than average people in the U.S. So it is fair to give half price to Americans because they make half as much.

European stuff costs twice as much but they make twice as much, so It evens out. America really has the disadvantage because they have trouble spending money in Europe without running out but when Europeans come to America they get half off. It only seems a lower price, because of wages and the value of the dollar, it is nearly the same.

Edited August 9, 2008 by Anubis

[Fluyt]

7,44 EU is about 22.32 USD, more than 20 USD an hour, which is pretty generous in America.

It's more like 11,20 USD (otherwise Europe would pay around 3 times as much for lego compared to the US, 2 times the price is too high allready)

In east-European countries lego is also a lot more expensive than is is in the US, while the wages are even lower. The wages in the US are very good compared to most countries in the world, at least when consider how much products you can get for your income (like 15% less wage, but most things are 25%-50% cheaper for example).

So the "wage-argument" is a load of megablocks (just like the arguments about competition/open market), especially since even countries with lower wages have to pay a lot more.

Edited August 9, 2008 by Fluyt

[Anubis]

It's more like 11,20 USD (otherwise Europe would pay around 3 times as much for lego compared to the US, 2 times the price is too high allready)

In east-European countries lego is also a lot more expensive than is is in the US, while the wages are even lower. The wages in the US are very good compared to most countries in the world, at least when consider how much products you can get for your income (like 15% less wage, but most things are 25%-50% cheaper for example).

So the "wage-argument" is a load of megablocks (just like the arguments about competition/open market), especially since even countries with lower wages have to pay a lot more.

A lot of good points.

Ah well, nothing we can do about it anyway. Never been to eastern Europe. Like I said before I'm Swiss, so I don't really know that much about it. I like Americans, their tourists and they are part of the reason why Switzerland isn't the terribly impoverished country it once was and is now one of the wealthiest in Europe. But yes... I feel like getting a new agents set that is 10.00 USD but it is 25,00 CHF. So while I'm in America maybe I should ship some back home.

[Joey Lock]

A question about LDD...

I have finished building some pieces I need for a Moc ship I am doing...It has come to £55! For a small thing. Anyway I changed the shipping country to the US to see if there is a price diffrence...And it wasnt $105.00, It was $75.00 which is £39! I meen come on TLC, that is taking the :sick: !!

And I see the crafty thing they have done although I may be wrong...That I cannot order it in US Dollars to the UK? I have to be in the US to buy the US price but since Im across the water I have to pay around £20 more?

Ive also seen the diffrence in the Toysrus.com prices. The MTT in the UK is £80, In the US £50...Another £20 diffrence. Im really getting sick of this. I hope you change this.

[xarkoniz]

7,44 EU is about 22.32 USD, more than 20 USD an hour, which is pretty generous in America.

I know someone's already pointed this out, but I'm curious about where you got the 22.32 USD figure? EUR 7,44 is USD 11,10 as of today. GBP 7,44 is USD 14,23 and CHF 7,44 is USD 6,86.

Joey Lock, I wonder what the point of origin is for stuff ordered from LDD. Funny that it costs more to buy stuff in the U.S. after they've been shipped from the factories in Europe. :)

Maybe LEGO should just consolidate which retail outlets they sell to in Europe and invest the money they save in more advertising and selling from lego.com.

[The Rancor]

If that was the case, LEGO should be free in England and Russia!

It's all about supply and demand, and as mentioned, this is the same for all products.

That's a very good point.

Seconded

[Anubis]

I know someone's already pointed this out, but I'm curious about where you got the 22.32 USD figure? EUR 7,44 is USD 11,10 as of today. GBP 7,44 is USD 14,23 and CHF 7,44 is USD 6,86.

Joey Lock, I wonder what the point of origin is for stuff ordered from LDD. Funny that it costs more to buy stuff in the U.S. after they've been shipped from the factories in Europe. :)

Maybe LEGO should just consolidate which retail outlets they sell to in Europe and invest the money they save in more advertising and selling from lego.com.

Yeah I'm a bit rusty with that sort of thing sorry, I don't know much about the values of currency. Plus I'm terrible at math, I mean TERRIBLE. It Switzerland as you may have noticed it went from 10 USD to 25 CHF, however, this has nothing to do with currency it was just the local stores price in Meiringen. I'm going back to Switzerland tomorrow! (Think I'm flying into Lucerne first from Boston and then a train to Meiringen.

[brickzone]

Well, I've just bought more Lego from the US on ebay. Including the shipping (USPS Priority intl. with tracking and insurance), it still only cost me under two thirds of the RRP here. And that's with the euro dropping from buying $1.56 a week ago to $1.50 today, and Paypal offering just $1.45 to the euro.

I'll tell you, at this stage I wish I was over in the US while working for a European company and being paid in euro. There much be some people in that nice situation!

[Zarkan]

A lot of people have been making great points about this issue, and I'm just going to add one of my own.

Remember, America is one of TLC's biggest markets, but it's also one of the most struggling in general. Prices of most everything have been going up in the USA - especially gasoline, which is made from the oil that is also made into lego. People in America are starting to be more careful about what they buy, and that includes tightening the belt when it comes to non-necessities of life. Basically, if TLC raised the prices in America by a ton, then a lot less people would buy lego, and Megabloks, Bestlock, and K-NEX would probably win out among the average families.

Also, prices on some lego brands ARE going up in America. Bionicle canister sets jumped three dollars in price this summer, and most of the new Starwars Clone Wars kits are at least 5 dollars more than normal. In fact, the Gunship is TWENTY dollars more than normal! This is why I abandoned all plans of adding to my starwars army this year.

Edited August 12, 2008 by Grevious

[shunlabs]

Lots of interesting views on a ever-debated subject !

In summary here are my views :

- pricing policy is NOT linked to exchange rates, and only vaguely linked to wage levels (I believe US average hourly rate might be a bit lower, but then so are also taxes!) ;

- no effect from so said "absence of competition in Europe" (has been pointed out many times we DO have our fair share of competitors in Europe : MB, Knex, A'brick, Meccano and even blatant copies from China)

- the "economies of scale" (US = market with nationwide big sellers as opposed to supposed clustered local sellers in Europe) that are often mentionned once all other arguments have run dry don't work either. Most toys are sold through big, specialized , cross-barrier companies these days.

I'll add a funny observation here, as a self-speaking example of this : set 7784 (Batmobile UCS). US SRP : 70 USD (about 47 EUR), but EUR SRP : 100 EUR (on average).

Suddenly, heaps of 7784's pop up in various stores (mostly Bart Smit here in Belgium) at a stunning 40 EUR !!!

Just looking at these marvellous boxes, it appears they are US ones (English, French, Spanish language + piece count).

So these big boxes are coming from the US with a 60% discount on the regular EUR price. I suppose this is a parallel import, and that Lego wouldn't be too happy about it. And back to the subject : Europe more expensive is NOT a problem of logistics either.

- as already pointed out rightfuly, the only factor that really matters in Lego's pricing policy is the demand.

If the demand is high, prices are high, customers are taxed until they cannot fork out more money. Just as simple as that.

Seen from another angle, this is completely unfair : the more loyal markets get the less reward (discounts). This is why people are complaining, not because they are jealous weenies.

I've read Lego had been doing really well in Benelux over the last months. Reward : I have checked all suggested retail prices from the new paper catalog just out this month (so 2008H2 vs 2008H1) and have been extremely disappointed in noticing a steep rise in prices for the same sets : from 5 to 15%. What makes this particularly sad :small sets are especially impacted.

A striking example for bigger sets : Mindstoms NXT : 300 eur to 325 eur ! us price : 250 usd (167 eur). Belgian price = twice US price !!

The limit to this demand-driven system will be : people won't be buying in EUR but through parallel imports. I personally already switched to this scheme.

- a final word on the legends that float around about the size of markets (of which US would be, if not 1st, at least 2nd). Just look for facts, not rumors, feelings or dreams . Look at Lego's own annual report : Click here. In the latest version (2007), on page 11 you'll see a split on revenues by countries. Unfortunatelly, Lego chose to group countries with a sometimes strange logic. Anyways you'll agree that US + Canada + Australia + New Zealand + UK = 30%. I'll let you infer what the US alone would weight. Other facts : Central + Southern Europe : 27%. Scandinavia + Benelux + Eastern Europe + Asia = 27%.

Do the math : Europe (ex UK!) + Asia = 54% of Lego's revenues. Not even discussing the Educational / Direct slice (16%), which is not country-related.

The conclusion is not easy to hear but is as follows : the more you love Lego, the more Lego makes you pay for it.

Edited August 13, 2008 by shunlabs

[blueandwhite]

The conclusion is not easy to hear but is as follows : the more you love Lego, the more Lego makes you pay for it.

Isn't this simply conventional supply and demand pricing? As prices rise, consumer interest falls. That being said, in markets where consumers are used to better prices (on most if not all goods), it is difficult to raise prices to match the higher prices of other markets. Americans are simply used to having the best prices on everything. For American pricing to match the pricing in other markets would require an increase of about 40% (give or take). In your respective market, if LEGO prices suddenly spiked by 40% what do you suppose would happen to consumer interest? The same is true of any market.

Americans are simply used to having greater purchasing power than consumers in other nations. A dramatic increase in pricing stings no matter where you live. I would love Canadian prices to fall in line with the US but I understand that it will never happen. LEGO knows that I'm used to paying more than my American counterparts and accordingly they can charge me more (they know that I will begrudgingly pay the higher price).

It's not that the rest of the world loves LEGO more; it's simply that the US is used to paying less and given the relative size of the US market LEGO doesn't seem to want to risk stirring the pot by dramatically raising prices.

[Kogyik]

Lots of interesting views on a ever-debated subject !

In summary here are my views :

- pricing policy is NOT linked to exchange rates, and only vaguely linked to wage levels (I believe US average hourly rate might be a bit lower, but then so are also taxes!) ;

Yeah We're trying to get our taxes lower. Hopefully with a new President this will happen. Right now I spend about 44% of my paycheck in taxes. Hopefully with a new Pres. we can also get a flat tax introduced so there won't be any loopholes for tax breaks. HHMM whats 44% of $500 USD. You do the math and get back to me. This takes into account all my taxes ( federal, state, county, village and sales and property and gas and sewage etc.....). So out of the 44%. I still have to pay for food, gas, electric etc.... plus be able to save for retirement.Not to mention my car is just about dead and they introduced a new "KLEAN" fuel in my area which makes my economy car get 20% less gas mileage.

[Sammael]

Yeah We're trying to get our taxes lower. Hopefully with a new President this will happen. Right now I spend about 44% of my paycheck in taxes. Hopefully with a new Pres. we can also get a flat tax introduced so there won't be any loopholes for tax breaks. HHMM whats 44% of $500 USD. You do the math and get back to me. This takes into account all my taxes ( federal, state, county, village and sales and property and gas and sewage etc.....). So out of the 44%. I still have to pay for food, gas, electric etc.... plus be able to save for retirement.Not to mention my car is just about dead and they introduced a new "KLEAN" fuel in my area which makes my economy car get 20% less gas mileage.

44% total tax is... well, nothing compared to European countries.

In Serbia, our monthly income tax+social security+healthcare is somewhere around 65%. If your total annual income is about 20,000 USD or more (the exact figure changes every year), you get hit with an additional income tax for making so much money. </sarcasm> VAT is 18% for most goods (this is roughly the equivalent of the US sales tax). Property tax varies, but is not included in the above figures. In total, I think the last estimate I've seen stated that for each dinar (our currency) we earned for ourselves, we paid another 1.3 dinars to the state... and I know there are EU states where this figure is much worse.

And yet, even though our average salary is somewhere around 400 EUR/month (about $550), Lego here costs even more than it does in the EU. If I import from the US, I'll end up paying less even if I get hit with a full customs fee+VAT (about 30% total), including shipping!

By the way, the retailers here aren't at fault, since there are at least three different ones who import Lego, and their prices are all within a couple of cents of each other (their prices vary a lot more when it comes to other toy brands). We are not a big market, and we are a poor country... but I can't help but think that Lego would sell a whole lot more here if we didn't have to pay such ridiculous prices. I'm not expecting US prices, by the way...

Recent example: looking at s@h prices, 7744 Police Headquarters costs $90 in the US and £50 in the UK (about $90). It can be bought from German eBay for 70

Edited October 4, 2008 by Sammael

[Pencoin]

A lot of people have been making great points about this issue, and I'm just going to add one of my own.

Remember, America is one of TLC's biggest markets, but it's also one of the most struggling in general. Prices of most everything have been going up in the USA - especially gasoline, which is made from the oil that is also made into lego. People in America are starting to be more careful about what they buy, and that includes tightening the belt when it comes to non-necessities of life. Basically, if TLC raised the prices in America by a ton, then a lot less people would buy lego, and Megabloks, Bestlock, and K-NEX would probably win out among the average families.

Also, prices on some lego brands ARE going up in America. Bionicle canister sets jumped three dollars in price this summer, and most of the new Starwars Clone Wars kits are at least 5 dollars more than normal. In fact, the Gunship is TWENTY dollars more than normal! This is why I abandoned all plans of adding to my starwars army this year.

This is happening everywhere, y'know.

I don't think its right that the USA gets cheaper prices then the rest of the world, if there having trouble there why not ditch it?

[z_zadar]

...

Recent example: looking at s@h prices, 7744 Police Headquarters costs $90 in the US and £50 in the UK (about $90). It can be bought from German eBay for 70 �‚� (about $100). That same set costs about 12000 dinars in stores here in Serbia, which is ABOUT 200 US DOLLARS. Even if we take the 18% VAT and 10% customs tax into account, the price is still $153!

I totally agree with Sammael, that the situation in some countries is tragic. Here, in Croatia, the prices are almost doubled to what they are in US. But, as Sammael said, it's not only the prices, it is the ratio of lego prices and montly wages that matters.

[brickzone]

misposted - sorry :(

Edited October 7, 2008 by brickzone

[Tanotrooper]

"Take a parrot, learn him the line "supply and demand" and you have an economist."

You have to be reasonable with your prices. If this keeps going on there will be more supply and less European demand. Not profitable either isn't it ;)

TT