Here's my insight, as of now, of my former career as a defense procurement dude. Keep in mind the $400 dollar toilet seats and what not, were part of a contract with 100,000 other items on it that were bid with one price. When averaging out all the items by the final price, the cost is naturally good on some items and not so good on others. From the same contract the previous year there could have been a cost savings but who knows. Today, we don't do things quite that way but it still exists to some degree. When the .gov contracts stuff out say for the new pistol, their unit price is a like $90 a unit or whatever according to the IDIQ. Of course joe civilian isn't going to buy one at that price. If you were to buy as many of the same, you'd get the same pricing. But buying one, you get to bear the burden of the one off, which the manufacturer is forced to set in stone prior to bidding so the buyer can see what a good price break looks like and can compare to the competition. Also, the government adds in development, warranty, service, and spares into the equation. And on top of that, the allowable profit. I'm really simplifying it here, but you might get the idea.
