It's actually a lot better than that. Per unit cost is figured based on the total anticipated production run. There are two major components. First is the huge Fixed Cost of design, R&D, prototypes, flight testing and tooling - with composites there are big other issues in jig development and perfecting the curing process. Building the manufacturing facility and production and assembly line(s). Money-counting Offices. Canteens. Pakistans. Parking Lots. All these are needed even if you need only 1 plane. If you buy two, these costs are halved, and so on.
Once beyond the first 20, the cost decrease in manufacturing due to anticipated increase in efficiency and innovation, is computed using what is known as the
Aerospace Learning Curve and other Black Magic techniques (pls check with Mullah Brar here for a detailed exposition). Basically it says that you have a production facility that can make X planes at a time. The cost of building the next X is only 85% of the first X. And the next X is only 85% of that, and so on. This is how they came up with the magic $80M/copy price for the Eph-Paintheej - by assuming that 3000 planes would be acquired! I think they assumed a facility size of 1 in order to get the best benefit out of the 0.85^X calculation in that case....
If you assumed 5000 LCAs, I bet the cost would come down somewhere close to that of a Rolls-Royce each. Go to 10,000 and you may may hit Lexus level - after all, do these things have Reclining Plus Leather seats and Seat-Heaters, hain? Bose Sound System with Satellite Radio? DVD player? 5 Cup-holders? Lane-Deviation Alert? Side impact airbags? LED-array headlamps? Foglights? Full-size spare tire with tire-jack? GPS with instructions in Hindi? I DO hope they have airconditioning so that the pilots don't have to keep the canopy open to survive the heat, like the late Capt. Suranjan Das is (IMO unfairly) convicted of doing during the tagic HF-chauBees flight.
Most important benefit is that the $$B stays inside India - driving real estate prices up wherever the plants and money-counting places are located.
This is where the Phrogistanis tried to outsmart the yindoos and got De-Briefed by the Banias who now run yindoostan. They bid low to kill the other competitors, assuming a lock on at least 126 with no production line transfer, so that they could win the follow-on as well. OK, so the banias now are smart enough to know exactly what level of price would keep Dassault afloat, and no higher.
And from what UBCNews hears, the other side of the NaMo-Phrogistan deal is a slight nod to ensure supply of Phrogistani yoo-ran eyyum. V also heard some mention of the word tho -riyyum though v could not figure out why yindoostan needs to import that. That may be simply too baniya for us.