The US price hike

[Teddy]

Dear all,

I was just scrolling the forum. I noticed some Americans complaining about price rises.

So I compared the 2009 EUR prices to 2008 EUR prices.

The piece count per euro is more or less stable.

However the price per piece in Dollars has clearly gone up from 2008 to 2009.

It appears the US price is derived from the EUR price via the current exchange rate.

That could explain why the 2009 sets have such a per piece price rise in Dollars.

Just an example which is a clear cut comparisson:

Town set 7633, 898 pieces.

89,99 Euros including taxes

99,99 US Dollar excluding taxes (110,00 including taxes, could someone from the US verify the taxes?)

Kind regards,

Teddy

Edited December 8, 2008 by Teddy

[Pencoin]

I noticed alot of US prices have gone up, I don't think any other countries have gone up though (Not sure yet). To be honest I don't think people should complain as I think the US is just on par with us (The rest of the world) price-wise.

[mrchris]

im thinking UK prices will rocket as our currency has plumeted :( no 2009 sets anywhere yet so not sure.

I wonder if prices will fall again for USA as maybe the rises were made when oil had rocketed but now its back down again the costs must have falled a lot for bricks being moulded now.

[natelite]

i don't think there's any state which charges 10% sales tax. highest i know of is ny of 8.675%. but for discussion sure...let's assume 10%.

i think the recent hike was due to fans complaining for the last 2-3 years about the price differential when the USD was weak vs the other currencies. just when TLC decided to do something about it the trend reversed, making the USD prices too expensive!

[Visorak-kal]

Well, you sort of have to look at it this way: right now, the entire world is entering an economic slowdown. Since North America is one of their major markets, I wouldn't be surprised if LEGO has kept their prices somewhat lower than possible. Now that the slowdown is here, LEGO is probably just equalizing their own prices around the world. A good place to start, if you are going to raise prices, is in big markets, if I am correct.

For example, I know for a fact that the prices for BIONICLE canister sets were purposefully raised the most because it was believed that line could handle the increased prices the most. I don't know how that turned out. Now, since most of the plastic for these new 2009 sets was probably purchased in the summer of 2008 when oil was through the roof, it is likely their prices will be higher, and where best to raise prices except when they were low already?

Plus, as Pencoin said, the Euro and GBP are worth more than the dollar, so at first glance the number should appear lower; I don't know what happens to prices when you take the exchange rate into account, I haven't had time to look into it. Plus, I'm not sure about the tax factor, it varies from state-to-state.

As for me, I find no use in complaining about it. If I really wanted a set, I'd buy it, unless the price was ridiculously high. For stuff like BIONICLE, which I collect, I'll just lay off the small sets with their increased prices and buy the larger ones whose prices haven't gone up. Trying to send LEGO a message could be tricky, though. If you buy less, you could persuade LEGO these prices are too high, or LEGO could think your buying less is a result of slowdown and decide they need to raise prices more to stabilize their profit. Tricky business.

VK

[Skinny Boy]

Ireland is higher on most things. I hate it So, the U.S. is finally paying the price eh? The times they are a chang... not so good .

[natelite]

Plus, as Pencoin said, the Euro and GBP are worth more than the dollar, so at first glance the number should appear lower; I don't know what happens to prices when you take the exchange rate into account, I haven't had time to look into it. Plus, I'm not sure about the tax factor, it varies from state-to-state.

As for me, I find no use in complaining about it. If I really wanted a set, I'd buy it, unless the price was ridiculously high. For stuff like BIONICLE, which I collect, I'll just lay off the small sets with their increased prices and buy the larger ones whose prices haven't gone up. Trying to send LEGO a message could be tricky, though. If you buy less, you could persuade LEGO these prices are too high, or LEGO could think your buying less is a result of slowdown and decide they need to raise prices more to stabilize their profit. Tricky business.

VK

do your math. it IS higher.

raising prices to stabilize profit? that must be a new economic rule. oh dear, we are in a recession...i know let's raise price!! wheee!!!

as i said earlier, the price hike is due mostly to fans complaining about the price disparity from 06-08...when the USD was weaker vs the other currencies. now that the trend reversed (this took place in just 2 mths from oct to dec) they got caught by surprise.

since the us is their biggest market, it wont surprise me if they have a price revision before the new sets are out. i mean they have done that study before using dwarves mine and the police station. but those previous hikes were probably just a small test to experiment with consumer's price sensitivity.

or the most probable scenario is that they keep the prices but introduce more discount sales. we know for the most part there's a perceived value which roughly equals the msrp. even if you end up paying US$60 for it, would you prefer to buy it knowing that it retailed for MSRP US$100 or for MSRP US$110, all else being equal?

[Joebot]

raising prices to stabilize profit? that must be a new economic rule. oh dear, we are in a recession...i know let's raise price!! wheee!!!

Good point. Typically companies that raise prices during times of economic downturn are desperate and / or doomed. When people have to tighten their belts because of economic tough times, you certainly don't want to raise your prices, especially for a perceived "luxury" item like toys. There are competitors out there who are already beating TLC on price. TLC doesn't want to make that price gap any worse, or else they risk even more erosion of their customer base.

My guess is that the price hikes are due to TLC's somewhat long product life cycle. The prices on the upcoming '09 sets could have been set a long time ago, back when oil was sky-high. Now that oil prices have fallen (most likely temporarily), the prices seem out of whack.

Let's face it though -- Lego bricks are a petroleum product, and petroleum is a finite resource. Prices aren't going to get cheaper.

[Darth Yoda]

I realize that is mostly from the economy.... BUT I don't like the pricing on the NU attack shuttle. $10 dollars too much.

[Algernon]

i don't think there's any state which charges 10% sales tax. highest i know of is ny of 8.675%. but for discussion sure...let's assume 10%.

i think the recent hike was due to fans complaining for the last 2-3 years about the price differential when the USD was weak vs the other currencies. just when TLC decided to do something about it the trend reversed, making the USD prices too expensive!

My county charges 10%.

[MAH4546]

Dear all,

I was just scrolling the forum. I noticed some Americans complaining about price rises.

So I compared the 2009 EUR prices to 2008 EUR prices.

The piece count per euro is more or less stable.

However the price per piece in Dollars has clearly gone up from 2008 to 2009.

It appears the US price is derived from the EUR price via the current exchange rate.

That could explain why the 2009 sets have such a per piece price rise in Dollars.

Just an example which is a clear cut comparisson:

Indeed, it does look like whne

Town set 7633, 898 pieces.

89,99 Euros including taxes

99,99 US Dollar excluding taxes (110,00 including taxes, could someone from the US verify the taxes?)

Kind regards,

Teddy

Indeed, it looks like when LEGO was taking into account the pricing of sets for 2009, they priced them more accordingly with the weak dollar. Kind of funny now that the dollar is the strongest it has been in years.

However, it also looks like LEGO had some change of hear later on, because the retail prices for many sets are lower than LEGO's prices, at least so far.

This set is actually $99.99 at LEGO.com, but is only $89.99 in stores. Similarly, the Pirate ship is $99.99 from LEGO, but only $84.99 in stores. The pricing this year makes little sense! It is possible that given the recent weakness of the Euro, LEGO re-evaluated their pricing to retail stores, but kept it inline for their own retail operations. This is possible because LEGO probably structures their own pricing before they structure the suggested pricing for retail stores, and by the time the retail price suggestions were being formulated, the dollar had become stronger.

As for tax, it totally depends where you live. It can be as high as 10.75% (Chicago, Illinois), but it can also be as low as 0% (Portland, Oregon).

[Darth_Legois]

i think the recent hike was due to fans complaining for the last 2-3 years about the price differential when the USD was weak vs the other currencies. just when TLC decided to do something about it the trend reversed, making the USD prices too expensive!

Ireland is higher on most things. I hate it So, the U.S. is finally paying the price eh? The times they are a chang... not so good .

Its ABOUT BLOODY TIME the US got a taste of the rest of the worlds prices. :pir-skull:

If it gets anymore expensive here....I might have to cut my LEGO spending

[shunlabs]

Fellows,

While I do share the concerns of anybody finding LEGO brick an expensive hobby (it certainly is a premium brand), I have the feeling some here don't understand the US market is NOT the 1st market supposed to drive prices. I say this without any animosity, it's just for objectivity's sake.

Look carefully at the latest available annual report (2007, year 2008 will only be available later on in 2009), you'll see plain facts on this ever-debated topic : where is Lego's First market.

So, click on >> Annual Report 2007 << and read page 9 of the report (page 11 of the pdf). Even with Lego's unusual way of grouping regions / countries, you'll notice that Europe is dominant by large amounts ("Central & Southern Europe" + "Scandinavia & Benelux & Eastern Europe & Asia" + UK - Asia) and you'll already be around 55%; without even counting the part coming from "Direct + Education"....

Just to say that it's not the non-US prices that are steep, it's the US prices that are abnormally low, with regards to market sizes.

Fact is, other markets are selling well for Lego, so they are the company's milk cows , while the US market is said highly competitive, so they accept to sell at lower margin's there.

From the viewpoint of a loyal european customer, understand this creates frustration.

When it becomes cheaper to have it imported from the US to Europe than by it directly here, there's a potential image problem, and even more, there's a full boulevard open for gray market and less margin globally for TLG, too !

I think that's the element that could eventually drive a new pricing policy in the US !

Add to the mix that in some cases, the bricks sold at a hefty discount in the US actually come from Europe and you start feeling deeply crooked.

For those who were wondering, current exchange rate is around 1 EUR = 1.28 USD

This means that to be fair, a 100 eur set should be sold 128 USD .... we are still far from it, so relax and enjoy your still low prices !

[Stash2Sixx]

Cook County, Illinois (all three LEGO stores)

10% sales tax.

[natelite]

For those who were wondering, current exchange rate is around 1 EUR = 1.28 USD

This means that to be fair, a 100 eur set should be sold 128 USD .... we are still far from it, so relax and enjoy your still low prices !

the us is one country. europe is not a country. you have 12 (?) markets right there which you need to negotiate with all the vendors and retailers on pricing. for all intent and purposes, when you slice it by country, the us is the biggest market.

as mentioned earlier, the us prices do not include sales tax while europe's prices do. assuming 10% gst in europe, an equivalent price should be eur100 to usd116.

what is the trend reverse? eur:usd becomes 1:0.8? don't forget eur is still an experimental currency..and this global meltdown is unlike what we have seen. it has already surpassed all the bear markets in the last couple of decades and by some comparison is actually worse than the great depression of 1929-32. we just might see countries taking back their currency (i.e. dropping the eur) in order to implement more favorable monetary policy.

i think we can all agree though that the japanese are getting ripped off badly. they were paying much higher prices earlier and now that their yen strengthened to 94yen to 1 USD, that is making them pay twice as much!!! we'll be seeing more BL activities from them that's for sure!

[highlandcattle]

the us is one country. europe is not a country. you have 12 (?) markets right there which you need to negotiate with all the vendors and retailers on pricing. for all intent and purposes, when you slice it by country, the us is the biggest market.

as mentioned earlier, the us prices do not include sales tax while europe's prices do. assuming 10% gst in europe, an equivalent price should be eur100 to usd116.

what is the trend reverse? eur:usd becomes 1:0.8? don't forget eur is still an experimental currency..and this global meltdown is unlike what we have seen. it has already surpassed all the bear markets in the last couple of decades and by some comparison is actually worse than the great depression of 1929-32. we just might see countries taking back their currency (i.e. dropping the eur) in order to implement more favorable monetary policy.

In belgium for instance the sale tax is 21%. I believe in holland it is 19%. You should'nt look at the euro as something experimental. It is a done deal, nobody can back out. Years before the currencies were already fixed between the countries.

Also the recession has hit european countries much less then the USA. Here in Belgium the speak of a negative growth of 0,05% which is the same as 1993. And we all survived that year.

By the way Germany is LEGO's biggest market (not in size,but in numbers of boxes shifted.)

[Kamzel]

the us is one country. europe is not a country. you have 12 (?) markets right there which you need to negotiate with all the vendors and retailers on pricing. for all intent and purposes, when you slice it by country, the us is the biggest market.

27 members of the EU plus free trade with European Economic Area (Norway, Iceland and Liechtenstein) and Switzerland, 15 Member States have adopted Euro and Slovakia is joining them on the 1st on January 2009. I think that when it comes to trade EU can be treated as a single country, especially the Euro zone, where you don't have to worry about the exchange rate.

don't forget eur is still an experimental currency..and this global meltdown is unlike what we have seen. it has already surpassed all the bear markets in the last couple of decades and by some comparison is actually worse than the great depression of 1929-32. we just might see countries taking back their currency (i.e. dropping the eur) in order to implement more favorable monetary policy.

I wouldn't call the Euro experimental. Exchange rates were fixed in 1999, notes and coines introduced in 2002. All of the new members want to join the Euro zone, even Denmark and Sweden are considering it now. It is very improbable that any of the member states would like to drop the Euro - it is neither technically easy, nor politically/economically reasonable. In the times of crises it is even more improbable!

[blueandwhite]

In belgium for instance the sale tax is 21%. I believe in holland it is 19%. You should'nt look at the euro as something experimental. It is a done deal, nobody can back out. Years before the currencies were already fixed between the countries.

I think the major difference that some people overlook is that Europe includes a VAT whereas North American pricing doesn't include tax. I mean, if you strip 15% or so off the European prices in consideration of the VAT, prices aren't nearly as far apart as they were a few years ago. Honestly, while I understand the issue people have with pricing (I'm Canadian so I certainly don't get my LEGO cheap short of Bricklink) I think this issue is something of a dead horse. LEGO has never been one to explain their pricing policies anyhow.

[Col. Brik]

99,99 US Dollar excluding taxes (110,00 including taxes, could someone from the US verify the taxes?)

Kind regards,

Teddy

As some mentioned, that is correct on tax, 10%. It also depends on where in the US. My county is 5.5% so the tax total would be less.

[brickzone]

the us is one country. europe is not a country. you have 12 (?) markets right there which you need to negotiate with all the vendors and retailers on pricing. for all intent and purposes, when you slice it by country, the us is the biggest market.

No, the eurozone is almost just as much a single economic area, with a single currency. The US can just as much be sliced up by region (and *is* for many purposes) - the economy of California bears little resemblance to say a mid-western state or northeast USA, and indeed the culture even varies a large amount (OK not as much as between all european countries, but probably as much as Ireland vs. UK, Spain vs. Portugal, Latvia vs. Lithuania, Belgium vs. France or Netherlands depending - sorry if I have offended national sensibilities including my fellow Irish). You even have different laws and taxes from state to state! Cost of living and income varies wildly, and prices in stores are not entirely harmonised (certainly when sales/promotions are factored in).

The eurozone is slowly getting some harmonisation - the UK idea of waiting till they are closer to the rest of the EU economy is so idiotic for this reason - the euro is the means to harmonisation, rather than a dependancy. However, with the pound sterling in downward spiral, I am not really complaining. Cheap Lego from UK, woohoo!

[Teddy]

Dear all,

Some of you point to an interesting point in regard to VAT.

If one would analyse pre-VAT prices the exchange rate is around 1,35 US Dollars for 1 Euro.

which is slightly above the current exchange rate, but still pretty close.

I was just wondering where the price hike in the US originated from, since some lego is produced in Mexico ( I don't know the exact numbers)

and this should therefore insulate the US market somewhat against currency fluctuations. For me it is just curiousity.

The prices in Europe seem to be more or less equal in all member states using the Euro.

Kind regards,

Teddy

No, the eurozone is almost just as much a single economic area, with a single currency. The US can just as much be sliced up by region (and *is* for many purposes) - the economy of California bears little resemblance to say a mid-western state or northeast USA, and indeed the culture even varies a large amount (OK not as much as between all european countries, but probably as much as Ireland vs. UK, Spain vs. Portugal, Latvia vs. Lithuania, Belgium vs. France or Netherlands depending - sorry if I have offended national sensibilities including my fellow Irish). You even have different laws and taxes from state to state! Cost of living and income varies wildly, and prices in stores are not entirely harmonised (certainly when sales/promotions are factored in).

The eurozone is slowly getting some harmonisation - the UK idea of waiting till they are closer to the rest of the EU economy is so idiotic for this reason - the euro is the means to harmonisation, rather than a dependancy. However, with the pound sterling in downward spiral, I am not really complaining. Cheap Lego from UK, woohoo!

Dear Brickzone,

you're absolutely right! Some sets are already 20% cheaper in the UK right now, just compare S@H prices.

The UK pound has already lost about 30% of its value against the Euro this year alone.

Currently, I'm seriously contemplating visiting the UK for a short holliday since the exchange rate is so increadably low.

I was there two years ago wen prices were on par with the Netherlands.

Now it just seems like a shopping paradise, with a 25-30% discount on everything.

And because it is an EU member state one can import an unlimited amount of goods (preferably lego) from the UK to the Netherlands or any other EU member state.

So you're lucky to be so close to the UK (Northern Ireland).

I'm just feelling a bit sorry for you Brits out there....

But then again if the Brits were in the Euro, the huge UK debt would weigh down on the Euro and thus devalue my pension (still 30+ years away) .

So to be honoust, I'm not that sorry they opted out.

Kind regards,

Teddy

Edited December 10, 2008 by Teddy

[KyoKyo]

Dear all,

Some of you point to an interesting point in regard to VAT.

If one would analyse pre-VAT prices the exchange rate is around 1,35 US Dollars for 1 Euro.

which is slightly above the current exchange rate, but still pretty close.

I was just wondering where the price hike in the US originated from, since some lego is produced in Mexico ( I don't know the exact numbers)

and this should therefore insulate the US market somewhat against currency fluctuations. For me it is just curiousity.

The prices in Europe seem to be more or less equal in all member states using the Euro.

Kind regards,

Teddy

Somewhat yes, but like some of our members have been saying, the sales tax per state fluctuates abut it does not really depend where the LEGOs are shipped from, prices will hold to what LEGO declares them to be. Just because my AT-TE was produced in Meixco doesn't necessarily mean that the dollar price of it will be in relation to the peso. If this economic mess ever rights itself you may see more stabilized prices.

For example, East coast U.S prices for Warhammer models from England have dropped recently over the last few months. I beleive in the U.S, imports are held against the domestic currnecy of the importing nation, not necessarily the Euro

Edited December 10, 2008 by KyoKyo

[paul_delahaye]

I feel sorry for our US friends, NOT

About time Europe stopped subsidising the price of their bricks :-)

Roll on the increases :-)

[Tyrant]

I feel sorry for our US friends, NOT

About time Europe stopped subsidising the price of their bricks :-)

Roll on the increases :-)

So, since the EU pricing is apparently subsidising the US price, I take it you expect your prices to go down once ours go up since there will be no shortfall to cover? The more likely scenario is that your prices are also about to go up. LEGO knows that people there are apparently wiling to live with a radical price difference. Raising the price here first allows them to maintain the same price difference once the price there is raised as well. If they just raised the prices in Europe and not here people would be (more) pissed, but if they raised prices here first they can simply point to the US market and talk about how they have to raise prices everywhere due to increased productions costs, etc. If it goes over okay here, it's probably a safe bet you're next. Keep cheering it on.

I look at some of the general posts on here and just ask myself, really? I don't get upset when someone gets a deal I don't. If I do get upset about it, I am upset at the company for limiting it to a different geographical area or not having the item in stock, or my circumstances that don't allow me to take advantage of the deal. I don't get upset at the people that did get the deal. This idea seems to not be the norm here with some people and it seems to be acceptable, which I question. Don't hate the player hate the game, as they say. It's not like we're all sitting over here (or down here in the case of wonky Canadian prices) rubbing it in that our LEGO is cheaper. Something tells me that wouldn't be tolerated (and it shouldn't be tolerated).

[paul_delahaye]

So, since the EU pricing is apparently subsidising the US price, I take it you expect your prices to go down once ours go up since there will be no shortfall to cover?

Not at all, I would expect our prices still to go up a bit, it's the price you have to pay to support the brick :-) However with the dollar weakening against the pound it should make our prices a little fairer hopefully.

However, in a random twist on this thread, with the worldwide oil price going down to $40 a barrel......Lego's costs should have reduced no? although I am surprised this excuse was not used earlier this year when the price of oil was sky high to increase the prices further.

Paul