Why Does The Price Of 75313 AT-AT Vary So Much?

The increasing price of LEGO sets has created a certain amount of controversy within the community, and while those LEGO fans in the United Kingdom have cause to celebrate the recent price drop, it doesn’t come close to leveling the playing field.

As the graph below shows, there is a considerable price disparity between countries. Taking the US price as a baseline, converted prices (using today’s exchange rates) clearly demonstrate that most countries – with the exception of Canada which gets a discount of 6.4% – are paying an average 17% more than those collectors in the United States.

Surprisingly though, the United States – one of the largest LEGO markets per capita – does not have the lowest priced 75313 AT-AT, and Australia – which is the most remote of the LEGO markets when it comes to the global supply chain – has a lower price than the United Kingdom, where the latest Ultimate Collector Series set saw a price reduction of 7% in advance of its November 26th release.

Ranked in order of converted recommended retail price according to LEGO.com, the ascending comparative price of 75313 AT-AT is:

1. Canada – US$751.47 (CA$949.99)
2. United States – US$799.99 (-)
3. Germany – US$902.79 (DE€799.99)
4. Australia – US$940.95 (AU$1299.99)
5. United Kingdom – US$941.14 (£699.99)
6. Denmark – US$955.68 (DKK6299.00)

It may seem that by converting a value in one currency to another in order to evaluate prices we are comparing apples to apples, but it’s not as simple as that, because doing the same in other currencies changes the rankings significantly.

So what is going on?.

Economic theory states that if the playing field is level the price of a product in one country should be the same from one country to another.

However, in real life, these assumptions are impossible because every country has different rules and systems of trade, are not all the same distance from the point of manufacture, and have different economies based on their population, resources, and location.

There are multiple factors why the same good is sold at different prices around the world.

First and foremost is production costs. These are direct and indirect costs a business faces when making a product. These can include expenses such as staff wages, raw materials, and general overheads like property rent and equipment maintenance. Many of these – like wages and property rent – are controllable through contract negotiations, but others are not. In the case of LEGO, the increased demand for/reduced availability of hydrocarbons is pushing the global price of plastics up.

The second most obvious is transportation costs, a factor that is currently one of the most significant causes of global cost in living increases. Not only is the distance a market is from the source, but where it is on the supply chain, as well as local wages, the cost of vehicle maintenance and fuel prices are considerations in the product’s final price.

One factor that most shoppers forget to consider is market structure. This is, in simple terms, a comparison of the number of retailers versus buyers, as well as how effectively the retailer negotiates with the supplier. A country that has a large population and a lot of retailers has more competitive pricing compared to a small country with limited sellers. Of course, when it comes to exclusive LEGO products – particularly only those sold at LEGO brand stores – this aspect of market economics is skewed in favor of the retailer and not the consumer.

Hidden in plain sight are transaction costs, the fees incurred by the retailer when sourcing/supplying a product. These costs come from accounting fees and point-of-sales charges to name two. While the retailer may absorb some of these charges as running costs, most are passed on to the consumer, and because every country has different banking structures, the cost of each transaction differs.

On the other hand, import duties and sales taxes are not concealed – and are often the focus of vocal debate. State to state, country to country – even in economic trading blocks such as the European Union – local taxes and tariffs imposed at a federal level differ, and so does the retail price as a result.

Perhaps the most contentious factor for LEGO Star Wars fans is the cost of licensing the theme from Lucasfilm. While the details of the contract and application of its terms are kept secret, the added cost of using the Star Wars IP is a factor that doesn’t affect other themes like City, Friends or Ninjago for example. We can hope that the current negotiations to renew the Star Wars license will deliver more favorable prices to fans.

While transport costs are the most obvious, perceived value is the least tangible. How a consumer regards the product will affect the price, whether on the primary or secondary market (as recently observed with sales of the Finch Dallow minifigure), and retailers will flex to accommodate public opinion. There’s also how the supplier perceives the market the product is being sold in; some countries are considered richer than others and – whether true or not – suppliers will apply an extra layer of profit based on this.

All of this adds up, and region by region, country by country, costs go up and down. Mostly up though.

At the end of the day, LEGO – a company that has the global license Star Wars license, the effective monopoly on quality construction toys, and is privately owned so doesn’t have a board of directors that answers to shareholders – has more flexibility on pricing than publicly traded companies and a proven track record in listening to both their supporters and detractors.