LEGO investing can be quite profitable, if you know what you are doing. Fortunately, there is a large community of LEGO investors online. If you are new to this community, it is important to understand the lingo we all use. These are nine terms you must know in order to understand experienced LEGO investors.
MSRP/RRP – MSRP stands for Manufacturers Suggested Retail Price. Some places use RRP or Recommended Retail Price for the same concept. Either way it is the price The LEGO Group sets and recommends for retailers to sell the set. Generally, when a set is still in production and not on sale, this is what buyers have to pay.
Retirement – This is the date that the LEGO group stops production of a set. After a set is retired, no more of that set will be made. Once that happens, the number of those sets available begins to dwindle and as long as there is still demand the price tends to increase, which is great for LEGO investors.
Shelf Life – is the length of time from when a LEGO set first becomes available to the public until that set is retired and the LEGO Group stops making more of it. For instance, if a set first became available in January 2001 and then retired in January 2002, the shelf life is one year or 12 months.
Hold Time – When a LEGO investor buys a LEGO set they have to hold onto it and store it somewhere until they sell it. The length of time you keep the set is the hold time. A long hold time can be bad thing if you have limited space for storage or you need to liquidate funds to buy newer sets.
ROI – Return on Investment or ROI, is a financial metric that measures the profitability of an investment relative to its cost. Calculate ROI by dividing the net gain or loss from the investment by the initial cost. ROI is expressed as a percentage. For instance, if you purchase a set for $100 and then sell it for $200, your ROI is 100%. If you purchase a LEGO set for $100 and sell it for $150, then your ROI is 50%.
GWP – Gift with Purchase or GWP refers to any of the unique promotional LEGO sets that are given out over a certain time period when making a purchase at LEGO stores or at LEGO.com. There is typically a spending threshold, and if you meet that threshold the GWP set is included with your order. Selling GWPs can be a great way for LEGO investors to recoup some of the cost on the sets they invest in and increase overall profit.
PPP – Price per piece or PPP is calculated by dividing the MSRP by the number of pieces a LEGO set contains. For instance, if a set has an MSRP of $100 and contains 1000 pieces, the PPP is 10 cents. This can be a useful metric to determine the intrinsic value of a set and whether it is over priced.
Over-hoarded – When LEGO investors are purchasing a particular set in bulk it increases the supply in the aftermarket, which can cause the price to stagnate. This is the concept of over-hoarding. Like an episode of hoarders, LEGO resellers have stocked their shelves with more than they can sell. When LEGO resellers have to compete for buyers, their only options are to sell at a lower price or hold the set longer.
MOC – MOC stands for “my own recreation.” These are builds created by LEGO fans and enthusiasts and are not official LEGO sets. It is a good practice to keep an eye on what is trendy in the community of MOC builders because the trends tend to use similar LEGO bricks. If some of those pieces are only available in certain sets, those sets can become highly sought after.
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