Remember the infamous $600 hammer, one of the emblems of wasteful military spending? The perfectly ordinary $10 (in 1980s dollars) hardware-store hammer that we the taxpayers spent $600 to acquire?
The one that cost $10 for the actual hammer, and $590 for the paperwork to prove that we the taxpayers weren't getting ripped off?
There may be a little project coming up. Specifically: there is an issue, and we will need to solve it, and at the moment I'm contemplating one possible solution, which involves the design of rather a small circuit board.
Taking into account the effort required to nail down the functional and mechanical specs, I'd probably charge somewhere around the proverbial $600 to gather up the specs, select the components, and design the critter. I could even get a little batch of prototype boards fabbed, for under $10 in outside charges if we're not in a huge hurry. Unit cost, assembled, in modest quantities, should be... $20, maybe?
Then it needs in-context testing and qualification, which involves probably another $1000 of my time interacting with the client's people.
But then I ponder the amount of paperwork involved in getting the thing qualified for the particular contract that needs the particular problem solved... and the level of supply-chain micromanagement involved... and certain other paperwork related to the field of business... and my client is probably looking at $20K or more, plus probably some outside services, and the unit cost probably goes north of $100, and....
Well, it's not quite a case of the paperwork costing 59 times as much as the widget, but you get the idea.
The likely alternative involves more (billable) effort on my part, and probably the services of another, highly specialized consultant... but no novel hardware. Just a matter of doing some heavy-duty physics, deriving a needed mathematical formula, coming up with a simplified way of evaluating that formula within the available resources, installing a second copy of an existing part, and integrating the whole mess.
So, we discuss. And, sooner or later (I'm guessing early January), the client makes a decision, and we forge ahead.