Factors that influence the price of manufactured products

 Kim Du Toit puzzles over the price differences between .22 LR firearms and .22 Winchester Magnum firearms.

He observes "...I just cannot fathom how the Mag can be that much more expensive to make than .22 LR"

Price and cost are only casually related

...like they went to the same University within the same decade.

I am going to talk about automobiles because that is what I know the most about.

In 2021, it is much more expensive to build and install a manual transmission into a vehicle than an automatic transmission. This was not always the case. The automatic transmission was considered a PREMIUM feature and a substantially higher price was charged for the first two decades after it was first introduced.

That up-charge is still in place. That serves two purposes for the manufacturer. They can advertise a lower base price than the competitor who does not offer a manual transmission AND they know virtually nobody will order that stripped, low-base-price vehicle.

Other automotive examples abound. Manual crank windows are currently more expensive to produce than power windows yet the up-charge is still in place. Two-speed windshield wipers are exactly the same price because they use exactly the same hardware and chip-sets...the only difference is in the software DIP switches, and yet the up-charge is still in place.

The point is that prices are set at what the marketing witch-doctors at HQ think the market is willing to pay. They look at each advertisable feature, in isolation, and based on a crude census of what the competition is charging pull a numbers out of their hindmost. 

In some cases, the features are priced to NOT sell. The last thing the factory wants is to have to build have the volume with manual transmissions and crank windows.

In their defense, there is no way for the marketing guys to know how long a feature will be in production, no way to know how many years to amortize the fixed costs over.

A better question

Why does any firearm cost more than a microwave oven at Walmart?

Much of the cost differential involves the fact that firearm distribution is not blended in with mass, commercial merchandise channels so it must support its own overhead. A related factor is that the sale of new-from-manufacturer firearms cannot bypass intermediate steps the way baseball caps can. I can buy a dozen high-end baseball caps, direct from China for $2 each.

Another factor is that we were historically conditioned to accept the high price of firearms when they were all manufactured in the highly Unionized states of Massachusetts, Connecticut and New York. 

And then there is the cost of potential litigation. 

If you could magically make the cost of litigation disappear and streamline the distribution system, I suspect Glock could sell 9mm handguns for $100 and still make a profit-per-unit. Ditto for a basic, bolt-action, .22 Winchester Magnum rifle. Beyond that, you are paying more for sizzle than the steak.