Originally Posted by
Dan Dare
Key principle of successful aircraft design (or any business for that matter) that is so often forgotten:-
Product costs £1 to make and sold for £1.01 = success
Product costs £1 to make and sold for £0.99 = failure
It doesn't matter how good your design was if you can sell it for a surplus.
In aviation, that ceased to be true years ago, if it ever was.
The price you sell it for is a tiny part of the lifecycle cost. So if you sell the product for 50p that cost £1 to build, add to that £2 in R&D to develop it, but then the through life net income off supporting the product is £10, you've won. That is the reality of most modern aviation products, despite initially selling it at a loss.
There's also the sadly real fact that often a company is in the doldrums between major sales, and will build and sell products deliberately at a loss for two reasons: one that it's cheaper in the short term to build and sell at a loss than to lay off the workforce and decomission plant, and two that it needs to maintain the skillset until the next large product sale.
G