Uncovering the Actual Cost of Producing Store-Bought Wooden Playhouses
Parent who purchased a large store-bought or pre-built playhouse has lived through this scenario in one form or another: Shell out $3000 to $5000 for a really large wooden playhouse, then after 15 minutes of seeing your children playing it at home, you realize the playhouse is just awful. As you stare at the hulking pieces of wood nestled in your yard, you ask, “Why did I have to pay $3000 for this? At this price, am I getting a fair shake here? After all, older playhouses sell for as low as $700, but aren’t much different from the $3000 playhouses.” Heck, you could try building a huge pirate ship-type playhouse and that would probably cost no more than $1200.
Well, these concerns are shared by many, especially in today’s era of big pre-built wooden playhouses that don’t differ materially from wooden kitchen play sets but cost four times as much, and rising costs of various materials needed to actually construct the playhouses. What are parents paying for when they shell out their dough for playhouses for their kids? An exact answer remains elusive, as every playhouse takes shape under different development and marketing budgets. Plus, toy companies try to keep such data out of the public realm for business reasons.
After talking to a number of playhouse toy designers, industry officials and market analysts, I was able to piece together a general picture of what parents pay so their children can enjoy playing in their playhouses as shown on the charts accompanying this story. In theory, only two things matter to parents: someone to construct the playhouse and the needed parts to build it. On average, only $200 to $300 of a playhouse’s worth goes toward the actual planning and producing the materials. Add to that the cost to “build” one playhouse – about $300 for a small playhouse and $500 to $750 for a large one – and the sum comprises merely $600 to $1050 of a playhouse’s price tag.
Well, these concerns are shared by many, especially in today’s era of big pre-built wooden playhouses that don’t differ materially from wooden kitchen play sets but cost four times as much, and rising costs of various materials needed to actually construct the playhouses. What are parents paying for when they shell out their dough for playhouses for their kids? An exact answer remains elusive, as every playhouse takes shape under different development and marketing budgets. Plus, toy companies try to keep such data out of the public realm for business reasons.
After talking to a number of playhouse toy designers, industry officials and market analysts, I was able to piece together a general picture of what parents pay so their children can enjoy playing in their playhouses as shown on the charts accompanying this story. In theory, only two things matter to parents: someone to construct the playhouse and the needed parts to build it. On average, only $200 to $300 of a playhouse’s worth goes toward the actual planning and producing the materials. Add to that the cost to “build” one playhouse – about $300 for a small playhouse and $500 to $750 for a large one – and the sum comprises merely $600 to $1050 of a playhouse’s price tag.
So why pay more? In reality, the pricing breakdown for a specific wooden made playhouse has more variables than any algebra test. Some factors weigh more heavily than others. Here are some of the prominent ones:
1) License to Play:
1) License to Play:
Between 20 and 30 percent of your cash goes back to the factory that created the parts for your playhouse, which is how it offsets production costs and reaps profits from fully-built playhouse toys sales. Think of it as a “tax” that toy companies must pay for the right to sell playhouse toys using the factory’s materials. That “tax” is directly tacked onto the cost of a playhouse. The fees range from $50 per standard/general playhouse to $80 for large ship-themed playhouses. As of April this year, the general fees stood at $65 for small playhouses and $100 for big-sized playhouses. However, independent toy companies almost always craft deals to reduce these fees.
2) Star Power:
2) Star Power:
Does the playhouse have ties to a hit movie, a hit animated show, a sports license from both the players and the league or is sanctioned by a superstar? If so, it’ll definitely jack up the cost of a playhouse. One insider asserted the cost to acquire these rights can account for up to 30 percent or more of a playhouse’s price tag. There’s one fee of 15 percent for a single popular cartoon character’s license and another separate fee for a team oriented cartoon characters. While in most sports, the licenses have to be negotiated separately. In most cases, costs range from $45 to $55 for movie or animated show ties, and $75 to $100 for one sports license and double that for popular global sports.
3) No Cheap Metals:
3) No Cheap Metals:
Many toy companies hate metal playhouses for two reasons. First, they have to sign deals with selected companies that produce metal parts for playhouses that are composed of metal (the selected companies also help run the factories that manufacture machines to make those metal parts) to make a certain number of playhouses (usually 2000 units and up) with no guarantee that all of them will sell. Toy companies like wooden playhouses because they can be produced cheaply on as-needed basis – in batches as small as 500 units – making it easier to target supply and demand for a playhouse. Furthermore, such metal parts production deals are subject to availability of iron or copper which are the types of metals often used to create the playhouse parts. Earlier this year, a small metal playhouse cost at least $2500 to make and a large-sized metal playhouse $5500.
4) The Middlemen:
4) The Middlemen:
Remember the TV ad that prompted your kid to beg you to buy that playhouse? Well, you helped pay for the ad when you bought the playhouse. Also, roughly 30 percent of a playhouse’s price comes from retail markup.
Are current prices fair? Parents’ pocketbooks will ultimately answer that question. It’s nice to see that cheaper production costs for wooden made playhouses overall have meant lower prices relative to new playhouses that are built using metal parts, whose prices will rise as the risks of producing them do due to the lack of demand, industry observers predict.
Are current prices fair? Parents’ pocketbooks will ultimately answer that question. It’s nice to see that cheaper production costs for wooden made playhouses overall have meant lower prices relative to new playhouses that are built using metal parts, whose prices will rise as the risks of producing them do due to the lack of demand, industry observers predict.