Lego David

What is the REAL cost of new molds in 2021?

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2 hours ago, Lego David said:

Also, I just want to add, that LEGO could very easily just re-use the Powered Up electric system from their recent City trains instead of trying to come up with an entirely new electric system, so the cost of creating a new set of monorails wouldn't be nearly as high. The only real new expensive parts they would have to introduce would be the new rail parts.

Why do they need a new rail system when there is a perfectly good one in existence (trains). If anything, expanding what is available for trains would be preferable but presumably there is no business case to do a wider range of track or train parts, let alone introduce a new monorail system.

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14 hours ago, Aanchir said:

But any money spent on recreating the goat mold is money that CAN'T be spent on other potential new molds.

No offense, but that just sounds like yet another of your usual defensive posts. A small 40 million Euro company we worked for in the past didn't think much about having some custom molds made, so why on any level should this be even worth a consideration for LEGO? It's really not about sacrificing one for the other. You just do what you need on the given situation and plan the budget for it. Sure, even a 6 billion company can't churn out molds at whim without thinking about long-term integration, cost recovery and so on, but it's not like they have to take it to the CEO to ask for a budget every time they want to make something new. They surely have some leeway there and one or two extra molds won't break their back. That's even more likely since they have in-house people in salaried positions doing this stuff whereas many smaller companies in fact incur higher costs because they have to outsource the construction and actual production of the molds. So for what it's worth, this argument is dead in the water as far as I'm concerned. It just doesn't make any sense on so many levels, technically and economically. In the end, molds are just a means to an end in LEGO's core business and just like a carpenter has to invest in his tools, they have to invest in molds and materials or else there wouldn't even be a business.

Mylenium 

19 hours ago, Lego David said:

This still doesn't explain why we don't see new molds in most of the D2C sets, for example. Unless they are explicitly required by some licensed character, LEGO Ideas seems to shy away from introducing new molds most of the time, despite those sets always selling very well. 

The original intention of Ideas was to only allow existing parts, anyway, so this is sort of a high-level complaint, to be honest. In a way this principle already has been massively diluted with way too many sets being based on third-party IPs for my taste and that is kind of the point. So for argument's sake, asking for even more custom molds or prints goes against the spirit of Ideas as I understand it. In fact one should be glad that we live in times where due to technical advancements it is even possible they do custom minifigs for these sets and integrate new parts during the polishing phase...

Mylenium

Edited by Mylenium
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The cost of new molds is not the only cost when introducing new parts. Parts need to be stored and that space comes with limitation and cost as well.

I don't know what regulatory rules LEGO needs to follow, but I bet they store replacement parts for their mass production sets for some time.

I always thought the reason why CMFs have so many new molds is because of their nature they would be excluded from the need to store replacement parts for them. 

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Ok, here's what I think of this. We gotta realize that every set ever made "consumes" molds. In other words, it's not a question "can we make a new mold", it's "we have to make new molds, so which ones will we make?

Let's do some math.

Lego_mold_hi-res_660px.jpg

The above mold, for a pretty simple and small piece, created 120 million bricks. I guess it's really 8 separate molds in one press. I don't know the exact terminology, but that's what I'm going to call it. 8 molds in one press.

So each of the 8 molds made 15 million bricks before "retirement" for being worn out or out of spec or whatever.

So how much does this cost? We've heard "up to $200K". That's a max.  I've also heard as low as $20K. I'm sure smaller molds like the one above aren't $200K. Well, maybe for all 8.

This article says the average is $72K.

So let's go with $72K for now for a mold that can produce 15 million bricks. 

Now consider a $30 dollar Lego set that has, say 300 pieces. I don't know how many copies of such a set Lego would make. I assume they make more copies of smaller sets, and less copies of larger sets, because you can sell way more small sets than large sets. Most families don't have the money to buy large $100 playsets.

So let's say Lego produces 1 million copies of this $30 set with 300 pieces. That seems reasonable -- it could be a little high or low, but I don't expect it to be much different. I could be wrong.

So for that one $30 set, you have 300 million pieces produced, total. And a mold wears out after 15 million bricks. So, to produce that one set, Lego has consumed 20 molds! Those are molds that Lego will either have to build up front or replace, either way. It's 20 molds they have to pay for.

Obviously, though, it's not 20 molds that are consumed -- it's the equivalent of 20 molds, spread over 300 bricks. And some copies of the same brick will be the set, for example, say there are really only 100 different kinds of brick in the set. So 100 different molds were worn down, but only partially. 

Maybe one special brick was only in the set once. That mold was used 1 million times, but still has 14 million usages left over! So how does Lego deal with this? What are there options?

  1. Make sure they can use that brick in other sets so they can get their money's worth/full use of the mold
  2. Eat it. They just lose the rest of the mold. Maybe worth it if it's a "loss leader" kind of brick, important for sales but not profitable on its own
  3. Buy a cheaper mold that has lower tolerances to start and can only make, say, 1 million molds to spec

Now, the question is, did I just make up option 3? Or is that a real thing?

If 3 is a real thing -- there is little reason for Lego not to "bring back" or recreate a certain mold for a general release set, except for some overhead costs. You'd rather pay overhead costs on every 15 million bricks produced than every 1 million bricks produced. But still, that's just overhead. I don't think making molds is as bad/expensive as some make it out to be, assuming option 3 is real.

So let's take the real work example of the Goat mold from the old Mill Village Raid set. I think that was the only use of that mold. Did Lego really spend $200k on a Goat mold, then only use it in that one set, which I seriously doubt they made more than 1 million copies of, and make 2 million or less goats? And then throw away a mold that could produce 13 million more goats?

If they did, it would be a ridiculous waste of money. Lego fans would be right to be annoyed when told "eh, sorry, we got rid of that mold!". Why, if it was still good?

It's more likely that the goat mold was a cheaper mold that was intended to only make 2 million goats before wearing out. Which makes the "we can't bring the Goat back" answer seem dishonest. They COULD make the mold again, assuming they can sell 2 million goats. If they could make the Goat for just one set before, they can do it now.

However, for something like the Medieval Blacksmith, which they're probably making only 50k copies of or less, you can't justify even one of the cheaper molds. Unless you can re-use the molds in other sets -- and soon, because I don't think Lego wants to pay for storage and upkeep of molds that aren't in use. So "we can't afford to bring back the Goat just for one limited release set" explanation is definitely legit.

To review: Lego MUST make molds for each set they release. It's just a matter of which ones, spread over how many sets. I think you can justify new/resurrected molds for smaller, general release sets, but not so much for larger, limited releases, unless you KNOW you can reuse them soon.

 

 

Edited by danth

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This is a subject that I have always been keenly interested in, so I am glad to see it being discussed here. I could watch endless hours of boring videos on the subject, lol.

Of course there are many reasons, some we know, some we don't and still others we guess at concerning the moulding process. Another consideration could be that making or using a specific mould takes away from others that are simply more profitable / higher demand. They only have so many machines and obviously must choose how much time to devote to a one off piece, that rarely gets used.

As I have said before on this subject, I don't really know what I'm talking about, just speculation on my part but I am eager to learn more.

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I have not read all the responses, for forgive me if this has been stated already in some form.  But, some might call me the Lego Cost nazi.  While so many critique Lego prices and conjecture theories between price and piece count I have quietly been running analyses for years and have effectively shown there is a greater relationship between a set's weight than their piece count.  This, indirectly measures the actual amount of Lego ( in terms of ABS used, and other Lego elements, booklet, PF or PU, etc.) as opposed to piece count which also measures this, but less effectively.  

But, as I have looked at this obviously there has always been unknown contributors to overall set counts.  Licenses for sets obviously play into this. But, and I have yet to prove this, I have conjectured on my own that the uniqueness of a set, or in other words the ratio of unique elements to overall piece count may indeed be related to cost.  In other words, sets with more unique elements (i.e. use more molds relative to overall piece count) may be more expensive than those who use fewer molds per piece.  This is easy to measure; simply take overall piece count and divide by unique lots.  A set with say...... 14 pieces per lot versus one with only like 3-4 pieces per lot has to be more cost effective for TLG to produce....or so I would think....

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On 7/12/2021 at 12:04 AM, Johnny1360 said:

This is a subject that I have always been keenly interested in, so I am glad to see it being discussed here. I could watch endless hours of boring videos on the subject, lol.

Of course there are many reasons, some we know, some we don't and still others we guess at concerning the moulding process. Another consideration could be that making or using a specific mould takes away from others that are simply more profitable / higher demand. They only have so many machines and obviously must choose how much time to devote to a one off piece, that rarely gets used.

As I have said before on this subject, I don't really know what I'm talking about, just speculation on my part but I am eager to learn more.

If you're interesting in molding, there are small plastic injection machine for around $1800 USD.  For small batches and limited runs, aluminum is a easy metal to cut and mill to make a mold.  It might be more fun to make your own compatible parts.  It would be cheaper too since you don't have the overhead costs of a large corporation.

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On 7/10/2021 at 8:13 PM, danth said:

Let's do some math.

That is a very nice calculation, you made! Thank you!

On 7/10/2021 at 8:13 PM, danth said:

To review: Lego MUST make molds for each set they release. It's just a matter of which ones, spread over how many sets. I think you can justify new/resurrected molds for smaller, general release sets, but not so much for larger, limited releases, unless you KNOW you can reuse them soon.

And a very nice conclusion!

Now here is some more math - well, not really math - it is more or less multiplying one number with another:

TLG's revenue in 2020 was about 5.9 billion $ (https://www.statista.com/statistics/282870/lego-group-revenue/)

The average employee's salary was 130000 $/year (https://www.comparably.com/companies/lego-group/salaries)

The number of employees was about 17400 worldwide (

https://www.statista.com/statistics/292314/number-of-employees-of-the-lego-group-worldwide/)

17400 * 130000 = 2.6 billion $ for the payroll.

The fraction of employee cost and revenue is then about 40%, which is a bit on the high side - and may be well off, because I am using wrong numbers. There is a say that 25 - 30% is what you see on average, but that number is highly dependent on the industry sector. Of course.

Nevertheless: My conclusion remains the same as before - and I believe there is also broad consensus here: It is not the cost of a mold, that renders the resurrection of an "old parts" mold unattractive, it is the "amount of sets selling (with molded pieces)". New pieces = selling better (in volume) than old pieces. I mean, they have to rake in 2.6 billion for the payroll. Then the Gods of TLG want to see some money and then the entire "machinery" - from buying bulk ABS (which is certainly drowning in the rounding errors) to the buildings/plants etc. (keeping them up and running and up-to-date, not only building them, including all the molds) - needs some bucks to not get hiccups. Because that would be bad - as we have seen before.

But that all has been said before, I believe.

Best
Thorsten

 

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Lol, those numbers are totally made up. TLG is a private company, what they pay their employees are not something they post online, nor something silly websites like that have inside information about

They have factories in Hungary, Mexico and China. Don't tell me a receptionist in those countries makes +37K$ a year

TLG also invests VAST amounts in infrastructure, machinery, education, LEGO House, future products (and in the old days, even housing projects, a freaking airport, LEGOland) etc

Not of all of those sweet billion dollars ends up in the Kirk family's pockets

Sure, the KIRKBI pool of gold is rather large. TLG could make any mould, any product, any set, heck they could revive the entire CS line in the correct colours, moulds and boxes with very little problem

But they choose not to. And that is their decision

Cheers,

Ole

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1 hour ago, Toastie said:

 

Argh not again, there has to be a way to eliminate a quote, when you accidentally hit that button while scrolling through the posts. I guess I am just to ignorant to figure it out. Sorry folks, I had no intention of posting.

Edited by Johnny1360

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1 hour ago, 1974 said:

Lol, those numbers are totally made up. TLG is a private company, what they pay their employees are not something they post online, nor something silly websites like that have inside information about

Oho, for sure!

I have worked with these silly websites - uhmm folkes from such companies asking silly questions - they are not >that< silly by the way, their job is totally silly.

In the end though, you land in a ballpark - silly or not. It is a start - as if you play mini golf and the first stroke goes NOWHERE but lands somewhere (man, there is one on Fanoe - though one :)) BTW, they also have a mini golf type thing you do with a soccer ball - totally cool - but well out of control for me ...).

Cut TLG's payroll cost by a factor of five (although: Not all folks of that company work in China, right? Also, what the "pay" is not what their "costs" are - you know all that Ole, particularly true for Denmark and then closely followed by Germany ;) - When I am successfully applying for grants, I am always surprised about the "huge" numbers ... coming in (and then being praised for that) compared to what is going out, paid to graduate students or postdocs. And you know where the rest is going. Whatever ...

1 hour ago, 1974 said:

But they choose not to. And that is their decision

And this is the point. :pir-huzzah2:

(BTW: Carlsberg Elephant here - I love that stuff. Found a glass with the Elephant (https://www.worthpoint.com/worthopedia/carlsberg-elephant-25l-beer-glass-537391372) last year on a yard sale Soenderho, seasoned glass by the winds of the North Sea, for Kr 5. For me, it is worth €1000+++)

Best
Thorsten 

59 minutes ago, Johnny1360 said:

I guess I am just to ignorant to figure it out.

No you are not ignorant.

Hit CR/LF after the quote a couple of times. Mark everything from end to begin, including the quote, hit delete. Works for me, as I am as ignorant as you feel to be ;)

Best
Thorsten

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On 7/13/2021 at 11:06 AM, nerdsforprez said:

price and piece count...there is a greater relationship between a set's weight than their piece count. 

A set with say...... 14 pieces per lot versus one with only like 3-4 pieces per lot has to be more cost effective for TLG to produce....or so I would think....

Both of those conclusions sound reasonable to me.

18 hours ago, Toastie said:

That is a very nice calculation, you made! Thank you!

I just realized I didn't really do anything with the dollar amounts...

I guess for my $30 set with 300 pieces (typical) and 1 millions sets made (guess on my part), you'd have 30 million dollars in sales. But if it consumes 20 molds at 72k each (see original comment for explanation of those numbers), that's about 1.44 million on mold costs. So molds vs revenue for my made up set are 1.44/30 or 4.8%.

I have NO idea what all the other costs are. Can't begin to imagine. Besides raw materials, design costs, labor, running factories, marketing, etc. Plus not all sets are going to sell for retail price. I wish I knew the profit margins. Then you can really see how significant the mold costs are in comparison.

18 hours ago, 1974 said:

Lol, those numbers are totally made up.

Yeah. They look incredibly high to me.

18 hours ago, 1974 said:

Sure, the KIRKBI pool of gold is rather large. TLG could make any mould, any product, any set, heck they could revive the entire CS line in the correct colours, moulds and boxes with very little problem

I mean...they made Hidden Side which they had to know would bomb. They made Vidiyo which is bombing. Apparently they have lots of money to throw away.

On the other hand, they seem pretty tight-fisted with themes like Creator where they can't even give us an appropriate torso print with a Castle set.

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While I don't doubt a receptionist IN DK earns 37K$ at TLG, the median pay is not 130K$. I know quite a number of people wroking there and most them do not earn that, even if they hold a rather high positions. Also, the "Director of sales" earns 234K$ is also silly. TLG have a LOT of  "directors"

 

17 hours ago, Toastie said:

(BTW: Carlsberg Elephant here - I love that stuff. Found a glass with the Elephant (https://www.worthpoint.com/worthopedia/carlsberg-elephant-25l-beer-glass-537391372) last year on a yard sale Soenderho, seasoned glass by the winds of the North Sea, for Kr 5. For me, it is worth €1000+++)

Sh1te beer. If it have to be Carlsberg, the Porter is where it's at. and that is actually world class :thumbup:

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6 minutes ago, 1974 said:

Sh1te beer.

You know, I've been insulted on forums, and it rolls off my back...but if someone insulted my beer? That would hurt. :tongue:

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18 hours ago, 1974 said:

Lol, those numbers are totally made up. TLG is a private company, what they pay their employees are not something they post online, nor something silly websites like that have inside information about

But then again their are employee/ employer rating systems in most countries and most governments officially retain statistics about average salaries. It's not hard to find out that e.g. a technical engineer makes around anywhere from 3500 to 7500 Euro a month here in Germany, which for all intents and purposes could include someone constructing molds for LEGO. ;-) As @Toastie said, you land in a ball park. Now apply that to a "standard corporate structure" with all its organizational levels and you can make a very reasonable prediction about personnel cost. Sure, it's never 100% exact, but it's not that it would be too hard too figure out, either. And LEGO isn't exactly known for paying some positions too generously, so the margin of error e.g. for their sales department is probably easy to compare to any current similar position at any other company and that data is often available. Point in case: It would be quite a bit of research, but it is very likely you would end up with a number that is within the usual 3 to 5% tolerances of such estimates, give or take some exceptions for extremely well-paid people in higher functions.

Mylenium

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I get your point (and I always like your "to the point" threads/answers), but it's also not hard to look the average pay in those countries

37-130K$ is not just not right in those contries, sorry

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59 minutes ago, danth said:

I guess for my $30 set with 300 pieces (typical) and 1 millions sets made (guess on my part), you'd have 30 million dollars in sales. But if it consumes 20 molds at 72k each (see original comment for explanation of those numbers), that's about 1.44 million on mold costs. So molds vs revenue for my made up set are 1.44/30 or 4.8%.

I doubt LEGO sells a million of any set. A million sets may sell, but not actually by LEGO. The big retailers take their cut and it will be significant. That 30 million dollars of sales is probably closer to 15-20.

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47 minutes ago, danth said:

but if someone insulted my beer? That would hurt.

Ahh, that is OK. Ole lives in paradise - so he has access to beers made in paradise. That simple.

I have to live now with tough compromises - somewhere in the middle of Germany - Carlsberg Elephant is one. But a good one. For me. Ice-cold. See below ... :pir-huzzah2:

55 minutes ago, 1974 said:

If it have to be Carlsberg, the Porter is where it's at.

Yeap. But: Porter is hard to get here - off the shelf. I don't like to order it online or drive >10 miles to get it. Alternatively, Flensburger always works for me. 

Back in the days, when still living in Kiel, the annual "Kieler Woche" (they apparently do some sailboat racing type stuff for a week or so ...) featured a several miles long "international market place" type thing :)). The Danish section was always located on the town hall square - and quite big, I must say. They had two beers from the tap: Carlsberg Porter and Carlsberg Elephant. Ice-cold. Well. After studying very hard the entire day :pir-laugh: - or smelling like a barrel of benzene because OChem labs were going a little out of control :jollyroger: - there was nothing better than strolling down to the Kieler Foerde, navigate to the "Danish Curve" - and then ... enjoy. So there is more than "taste" when it comes to these two beers - it is much more so very sweet memories ...

But back on topic :pir_laugh2:: How much does an employer have to pay to the government for all sorts of things that the employee never sees? I am not talking about taxes.

Best
Thorsten

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2 hours ago, MAB said:

I doubt LEGO sells a million of any set. A million sets may sell, but not actually by LEGO. The big retailers take their cut and it will be significant. That 30 million dollars of sales is probably closer to 15-20.

Not a million copies of a single set? 500k then? Not even that? I was expecting to be off by maybe a factor of 2 at most, but am I really off?

EDIT: Brickset lists about 450 sets for 2020 if you rank them in piece count order and don't count "sets" that are just minifigs. Looks like the median piece count is somewhere around 200ish.

Now, compare that to how many bricks are sold per year, which is reportedly about 75 billion. For argument's sake let's just say Lego's "typical" set is a 200 piece set. They would be selling 75 billion / 200 = three hundred seventy-five million sets. But divide that by 450 since they have that many different sets. That's .833 million or a little less than 1 million copies per set.

But who knows. That's all just estimation.

2 hours ago, MAB said:

The big retailers take their cut and it will be significant. That 30 million dollars of sales is probably closer to 15-20.

For sure. I had that in my head somewhere but forgot about it...yeah, 15-20 sounds reasonable to me.

Edited by danth

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The problem here is each estimation is probably order of magnitude at best. Those uncertainties soon add up. I haven't a clue what the average size set is, when weighted by number of sets sold. There are so many assumptions- include CMFs and polybags? They sell in large numbers and drag the average size down. 

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23 minutes ago, MAB said:

The problem here is each estimation is probably order of magnitude at best. Those uncertainties soon add up. I haven't a clue what the average size set is, when weighted by number of sets sold. There are so many assumptions- include CMFs and polybags? They sell in large numbers and drag the average size down. 

Totally. I have no idea how all those uncertainties shake out.

All my stuff is back-of-a-napkin math based on numbers that are out there, mixed with guesstimates that could be off, and interpretations that could be wrong.

But...I do think the ~1million copies of a median size set guess seems to pass a reasonable sanity check vs. bricks sold and # of bricks per set according to BrickSet.

Edited by danth

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14 hours ago, MAB said:

I doubt LEGO sells a million of any set. A million sets may sell, but not actually by LEGO.

Probably a moot point, as most likely not even a million packages of many sets are produced. ;-) If you check it against the annual reports' sales figures and do the math you can easily deduce that for many sets the numbers are much, much lower...

Mylenium

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Some sets do reach one million units as they're produced over more than one year :wink:

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1 hour ago, 1974 said:

Some sets do reach one million units as they're produced over more than one year :wink:

Yeah, I am sure some of the smaller long lifetime sets do. The point was that sets that sell in large numbers are likely to be those most widely available, in toy stores and supermarkets and not LEGO exclusives.

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12 hours ago, MAB said:

The problem here is each estimation is probably order of magnitude at best. Those uncertainties soon add up. I haven't a clue what the average size set is, when weighted by number of sets sold. There are so many assumptions- include CMFs and polybags? They sell in large numbers and drag the average size down. 

Actually, you can get pretty close to the actual number by making a Fermi estimation. You simply fill the terms of your equation with numbers approximated to the nearest order of magnitude and do the calculation, and as long as there's no consistent bias the inconsistencies tend to cancel each other out and you'll get a number that is surprisingly close to the correct answer. All the better if you know at least some of the actual correct values of the terms. Some of the above calculations seem to produce very reasonable estimations, even if hard data on the matter is difficult or impossible to attain.

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