The 5x multiplier includes manufacturing costs, mid-level and retail markups, and (eventually) development costs. Unless you have a special customer willing to support the development costs, you pretty much have to recover them over the entire product life cycle. More accurately, the 5x cost multiplier is supposed to include paying "the development team" a salary; they develop the next generation product (getting that first version out there is a bit of a funding problem, and if the "last" version keeps paying past the time needed to recoup the first set of development costs, that's either "good", or "bad" (usually bad, in the high-tech world, since it means that no one see a market for the next-generation product...)