Economics of Scale.

It could be related to economics of scale.  One manufacturer produces a highly detailed, accurate, model and limits production to a few hundred.  Another manufacturer produces a model that is less detailed but still accurate and produces several thousand.

The cost of the tooling will need to be covered, as will the R&D that went into the project.  The more detailed, limited production, model will have to sell at a higher price to recover the costs and make a profit.  The less detailed, higher production, model can sell at a much lower price since the cost of R&D and tooling can be divided by several thousand instead of a few hundred.

You cannot look at only cost of material, the cost to develop the model also needs to be considered.

Vernon

In addition someone has to assemble the model!

I'm not a die cast collector, just a "car nut."  Ibuy die cast models of cars that I would like to own, but can't aford the "real thing."  I have a number of Ferraris and other similar cars made by companies like Maitso that I've picked up at a local hobby shop that discounts diecast models.  Typically I pay about $25.00 for a 1/18 scale model.  The same store has models in a glass case selling for over $100.00!  The models I bought have cast plastic "wire" wheels, the expensive product has individually laced wheels using real wire spokes.  I don't know how much labor is involved to lace those wheels, but I suspect it is considerably more than what is needed to "pop" a plastic casting out of a mold!  On the higher dollar model, they will use real upholstery on the seats, open the hood and you will see a detailed engine with separate castings for accessories, actual fan belts and individual wires from the distributor to the spark plugs.  They may even have a built up engine installed in the engine bay instead of a casting showing the top of the engine to fiil the engine bay.

Market Size

There is no simple answer, but the volume of product moved will also determine what an item has to sell for.  If an HO vehicle requires 250 hours of design work and 5,000 of them will be sold this year there is a good chance it will cost as much or maybe even more than a 1:24 scale vehicle that required the same 250 hours of design work but which 250,000 of them will be sold this year.  There is a large variation in HO scale vehicles as well which will affect price.  If you take HO models from several manufacturers and took some sharp close up photos, printed them out in 8' x 10' format the difference would become easily apparent.

HO Scale Vehicles

I've also been collecting HO Scale vehicles over the last few months. I needed some excitement to get me through the tedium of installing Tortoise switch machines. (Actually they are pretty easy to install - but one after another gets kind of repetitive) So I bought a few new vehicles to supplement the ones from Classic metal Works that I got five years ago.  Mail order prices for the Model Power muscle cars three to four.  I found some nifty Athearn Model A Fords for about four dollars on Ebay.  I bought Sables, Ford Pick-ups, Fairmount Wagons and Plymouths at about $8 for the Atlas products.  And I encountered the Fresh Cherries nerd cars and got a set from Klein.  Walthers had a  special on Ricko  so I ordered some newer Chrysler products as well as a Mustang and a very beautiful 31 Lincoln.  In the process of acquiring my collection I came accross the -87 vehicle club's web site and read many, many discussions.  There are a lot of people (mostly Europeans) who are really into HO scale cars and trucks. While an American model railroader balks at paying $18 for an outstanding model like River Pont Station's Ford Expedition,  the European  collectors are used to paying that kind of price.  It turns out the diecast like Model Power is cheaper to produce than plastic because the mold work can be less perfect as the flash is removed in a tumbling process.  Most stuff is now made in China and as a result we have benefited from very low wages paid there and the Chinese tendency to produce in excess of what the market will bear. Recently wages haver been rising dramatically in China so get those cheap vehicles while you can.