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What percentage of a LEGO set's price goes toward research, design, manufacturing, marketing etc.

It's just my curiosity since all my minifigures (from Series 3) are made in China and I don't know if LEGO has factories in China or they just outsources it to other Chinese manufacturers.

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@jncraton: Thanks so much for correcting grammar errors :) –  Tien Do Feb 20 at 12:40
    
It's no problem. :) –  jncraton Feb 20 at 13:13

1 Answer 1

up vote 6 down vote accepted

The latest annual report on the LEGO Groups site (2012 at the time of writing) states the following:

Research and development activities Each year, new launchings account for approximately 60% of the LEGO Group’s sales to consumers. Therefore, the Group has considerable development activities, comprising anything from trend spotting and anthropological studies to the actual development of specific products and campaigns. Approximately 160 designers from about 20 different countries make up the creative core of product development that is mainly based at company headquarters in Billund, Denmark.

It's hard to quantise exactly how much of each set goes into the various different aspects you're asking about as different sets will have different margins on them. Averaging out some of the numbers in the report however, you can see things like:

On Revenue of 23m DKK:

  • 6.7m was spent on "production costs" (about 30%)
  • 1.2m was spent on "other operating costs" (about 5%) - these are defined as "[including] royalty and research and development costs"
  • 6.1m was spent on "Sales and distribution expenses" (about 27%) - these are defined as "costs in the form of salaries to sales and distribution staff, advertising and marketing expenses as well as depreciation, etc."

In terms of where parts are made, this answer covers most of it, but as you rightly note, Minifigs, and some painted parts now come from China. In terms of R&D, this answer talks about how new pieces could come about.

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So it's about 30% on production/manufacturing cost, more than I've thought. I've also heard that paper box often costs 10% of set price, and ABS plastic is cheap so it's surprisingly that box might cost more than bricks inside it :). Thank you. –  Tien Do Feb 20 at 13:32

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