Deepak said:
This doesnt make sense.....thousands of Tomohawks are being produced...does it mean less costs? no!....more production doesnt necessarily mean less costs...
It's basic supply and demand. Most of the cost is the upfront sunk cost of R&D, plus the cost of exotic parts that are expensive if you only order a few. I recommend an Econ101 course to learn the difference between "cost" and "marginal cost".
For example, it may take me 2 years and $10 million to make a piece of software. Copying the software costs next to $0. However, the price I am going to charge per copy is highly dependant on the number of copies I am going to sell. Same goes for drug development. Might cost $100 million to develop a cancer drug. Producing each pill might cost 10 cents. Drug sells for $5 a pill.
There are many US defense programs where they spent billions and produced only a single prototype plane. That means 1 plane was produced for say, $5 billion. Do you really think it costs $5 billion per unit produced?
For hardware, costs go up on small orders evens worse. Ever wonder why 60" plasma screens costs so much? Because the production lines that Samsung, Toshiba, et al, have are retooled towards producing a certain size monitor (17", 18", etc). Everytime they have to produce a different size, they must reconfigure the entire production line. This costs lots of money. So if there is an exotic monitor size (say, 20.5 inchs) that someone wants 100 units of, they are going to charge you an incredible amount of money, even though the physical costs of labor and materials is relatively the same as a 20.0" monitor.
They can either have their production line up and running producing tens of thousands of small screens per month, or they can have them sitting idle for awhile (expensive capital that is making no money) and then producing a handful of large screens. Even worse, they could have them sitting idle for a while and producing a very small number of custom screen sizes.
The B-2 bomber, for example, had an extremely huge upfront development cost (before a single plane had been built!), I think, $30 billion. That means if no planes had been built, the per-unit cost was infinity! If one plane was built, it's unit cost was $30 billion!
The fact is, the US government doesn't procure hardware like you would order an additional amount of RAM. They sign contracts to buy a certain about of planes for a certain total cost. You can divide the total cost by the number of planes to try and get a "per unit" cost, but it is mostly illusory.
Boeing, for example, has negotiated its contracts to cover the cost of B-2 development and 20 years of maintainence/support. You can't take the 20 B-2 bombers they the US bought for $40 billion and say "each plane costs $2 billion", since in all likelyhood, 21 bombers would have cost only slightly more. That's the marginal cost of producing and supporting an additional bomber.
With respect to a UCAV, having a producing line geared to producing 1,000 of them will yield a cheaper per-unit cost than having a production line geared to producing just 10 of them.
