RIP OFF? New product priced far too low to gain credibility?

Howard Popeck: 

An insight into how many makers define the retail price of a product might be of interest. Generally, the manufacturing cost per item (sometimes with the R&D cost amortized, or not as the case maybe) is multiplied by say 10, 15 or 21 - or any other number that springs to mind, albeit with one eye open to see where competitor products are sitting in the price band. Thus an audiophile product that retails for say £900 ex VAT might have a base manufacturing cost perhaps as little as £45.

On the face of it, without knowing the facts, you might feel this is greedy. But do stop to consider that within that multiplier is the need for retained profit at the maker, transport to the UK, transport to the retailer, the dealer’s margin, marketing, promotion and so on.