Cost of producing new parts?

[weavil]

Also the amount of pieces-per-mold will affect the return-on-investment. The more pieces will offset the price for the set. However, if you have an officially licensed set (excluding Star Wars) it will not offset the price of a new piece because of the licensing fee/royalties.

[Faefrost]

Also the amount of pieces-per-mold will affect the return-on-investment. The more pieces will offset the price for the set. However, if you have an officially licensed set (excluding Star Wars) it will not offset the price of a new piece because of the licensing fee/royalties.

I think that's only true with the licensed stuff if it is a license specific piece. Something that is tied to the licenses IP such as a unique character headpiece. For example Darth Vaders helmet is license specific. Whereas the LR has several new Western style hats and headpieces plus the new revolvers, but most would not be viewed as unique to the LR IP. So normal part usage patterns and amortization apply. A good example of this is the now ubiquitous Dastan's hair piece.

Edited December 22, 2013 by Faefrost

[Mowikan]

The making of the bricks is a dirt cheap process. Yes an injection mold machine cost money and lots of it. Yes mold cost about 20.000 euro's to make. But the machine will run for years 24/7 and the mold will push out millions of bricks before it is ruined and need to be refurbished. And in the quantities that lego buy plastic grains from Bayer it is also dirt cheap. I worked in my student time with an injection mold company emptying buckets of plastic products.

Please do not focus to much on the cost of making bricks. The cost are in developing, marketing, licenses and staying ahead of others.

But I do think that lego is well paid for is bricks. I think they becoming a bit elite toy's especially in Europe lego is expensive far more then in the UsA.

Edited January 16, 2014 by Mowikan

[Faefrost]

The making of the bricks is a dirt cheap process. Yes an injection mold machine cost money and lots of it. Yes mold cost about 20.000 euro's to make. But the machine will run for years 24/7 and the mold will push out millions of bricks before it is ruined and need to be refurbished. And in the quantities that lego buy plastic grains from Bayer it is also dirt cheap. I worked in my student time with an injection mold company emptying buckets of plastic products.

Please do not focus to much on the cost of making bricks. The cost are in developing, marketing, licenses and staying ahead of others.

But I do think that lego is well paid for is bricks. I think they becoming a bit elite toy's especially in Europe lego is expensive far more then in the UsA.

You underestimate the cost of the tooling Lego uses by about a decimal place. The high cost is in the extreme precision and extremely small tolerances.

[Lego Otaku]

^^ this. Some plastics like those used for dash board in cars can be off by around 1/8th inch (around 3mm) or more and still be fine. But 3mm error on LEGO bricks would be disaster since nothing would fit! LEGO's precision is probably down to thousandth mm (micrometer?) to ensure they all fit as expected and will remain compatible with past and future LEGO parts.

[BrickG]

I feel like we're getting a bit screwed sometimes because of the cost of new molds.

IMO all humanoid figures, big ones like the hulk or small, should have at LEAST the same amount of articulation as a normal minifigure. Normal minifigures already have pretty bad articulation. It's annoying when others have less. The Hulk and similar figures not having articulation in the head and legs are just terrible IMO. The small legs having none is just bad too.

My dream "small" minifigure would have too many new parts so Lego would never do it.

Articulated Legs, 1 plate taller than the current small legs to make sitting not look stupid. To make up for the tallness the body is 1 plate smaller too. The arms also! The hands and head are the same size. No sacrifice to articulation and IMO it would be pretty awesome.

The only problem I foresee would be that some chest things would look big on the small guys, but hey, they're kids (usually) so who cares? :P

Buuut that would require 2x new arms, 1x new body, 1x new legs (made up of 3 molds) which would mean Lego wouldn't consider it. Heck, Friends legs can't articulate... which is frankly pathetic. I feel like Lego is a quality product but their new molds aren't always quality because they won't go any farther than they absolutely have to.

[Faefrost]

When we talk about new parts and new molds, we often discuss the costs of them. What we often forget is that it isn't simply a matter of cost, it is also one of finance. And because of this not every line or part is the same. It isn't a flat across the boards cost for new parts. As you notice Licenses seem to get a ton more new parts. There is a reason for this. Finance.

When TLG goes to create new tooling, they generally will not be simply paying for those costs out of pocket. Tooling is a production investment. In most cases that means tooling is financed via the bank. Each mold set is bought with a mortgage if you will. And each block of tooling loans is evaluated and structured differently. Not all lines are the same. We can probably make some educated guesses and break them down into a few categories. (Note I have no knowledge of actual TLG practices. Just a good knowledge of some common manufacturing ones, and the safe bet is TLG doesn't deviate too far from them.)

1. Replacement tooling for core parts - just the normal replacement life cycle of the molds for common system parts. Say new tooling for a 2x4 brick. This is probably an almost automatic level of financing from the bank. TLG knows everything about how many of x part they use over y years. It's almost like a car lease. These are very safe loans for the bank. Just the normal ongoing costs of doing business. It's also why some parts may get retired. If the normal production use is not sufficient to justify the costs or loans. (Monorail parts is the big classic example).

2. Parts for Evergreen Themes - say a new Helmet for Castle. Or a new hairpiece for City. They may not have enough immediate mapped out use for it short term. But it is something that they know will be guaranteed to come up and be used over a longer period of time. They may not be able to do a lot of parts in this heading, but they can probably go for longer loan terms and better interest rates. Something that they know will be used over 5 - 10 years. This of course is a careful calculation on TLG's part. The bank will happily finance such tooling, but TLG would not want to be paying long term for something they do not use. (Probably a big part of how they hit troubles in 2003.) so they will be very careful in part decisions like this.

3. Licenses - it is easier to get financing for a licensed line. The license contract itself is typically viewed as an element of value which the bank will take into consideration. So a license will have a deeper pool of finance to draw upon. The more valuable the license, the deeper the pool. (Ie LotR probably nets more funding than PoP or LR). The downside is that for most licenses the loan periods will probably by needs be shorter, no more than the length of the license, so costs must be fully built into the pricing of the planned sets. The tooling needs to pay for itself in a shorter time frame. We often talk about licensed sets costing more. While that may or may not be 100% true, any cost increases may not simply be costs for the license. They may also be immediate operating costs incurred by the license in this way. (Star Wars and Batman probably function more as hybrid "Evergreen Licensed" themes. The banks may also somewhat view certain Lego owned IP's similarly to licensed lines, such as Ninjago and Chima. In those cases the Cartoon Network contract would be viewed similarly to a license contract for value.)

4. Regular Retail products - Stuff that may be for new themes, or returning themes, or totally new system parts. They don't carry a license as a value add. And they don't have years of constant use from an evergreen theme. So they can be a little more of a gamble. Wherever possible TLG will probably try and spread the costs over multiple lines or themes.

5. Special Exclusive items, D2C, CuuSoo etc - most likely typically do not have large enough production runs to allow for financing of new tooling. And this is probably the huge veto of new parts for CuuSoo. Because of the size of production run they can't get a loan for such projects.

6. Other - Unusual things that carry their own specific business case sufficient to permit financing. Things like CMF's

This is most likely part of the reason why some themes or lines feel very compartmentalized. That common cry of "Ninjago makes tons of money why can't they use that to make a Zelda headpiece?!?" Or similar discussion misses some key realities. While loans for this sort of thing are paid back out of a companies general earnings, they are typically issued based on the business case for the specific product or product line, because the tooling being financed is so specific. And the tooling is the security for the loan.

Does any of this make any sense?

[Cult_Of_Skaro]

^^ this. Some plastics like those used for dash board in cars can be off by around 1/8th inch (around 3mm) or more and still be fine. But 3mm error on LEGO bricks would be disaster since nothing would fit! LEGO's precision is probably down to thousandth mm (micrometer?) to ensure they all fit as expected and will remain compatible with past and future LEGO parts.

I'll check the Ultimate LEGO Book again, but I think it's like .005mm.