I'm kind of surprised (though pleasantly, if true) at the estimated cost of the contract to Boeing for the Ares 1 upper stage:

The $514.7 million cost-plus-award fee contract runs through 2016 and covers the manufacture of a ground test article, three flight test units and six production flight units.

So they're getting about ten units altogether for half a billion? Even if the development costs are zero, that's only about fifty megabucks a copy. If we assume that it's a couple hundred millions for DDT&E, that's only about thirty million each. I'm sure that the J2-X will be cheaper than an SSME, but I would think it's still going to cost several million dollars per engine. I would have guessed that the stage cost was higher. These numbers imply to me that, with learning (and I guess it helps that NASA provides the production facilities at Michaud--I'll bet that's not included in the costs stated above) that they could get the marginal cost per stage down in the twenty-five million range or less.

Better news for sustainability than I would have thought. I wonder what the cost of the first stage is?

[Thursday update]

OK, there seems to be a consensus in the comments that this price doesn't include engine or avionics (those are separate contracts), which is where a lot of the cost of a stage lies. So it's not that great a deal. I thought it was too good to be true.

Finding costs for space systems can be difficult. Looking at the Encyclopedia Astronautica entry for the Shuttle SRB, there's a quoted cost of $23.2 million for each engine. Taking that number (for what it's worth), adding a fifth segment might increase the cost to perhaps $30 million. Of course, the cost may not scale linearly with the number of segments so my number is just a SWAG.

I couldn't find any costs for the J-2X engine. It is intended to be simplier to build than the old J-2s used during Apollo. Rocketdyne was awarded a $1.2 billion R&D contract for the engine. The old hard tooling is long gone but computerized tooling allows for "soft tooling" that could lower costs.

get the marginal cost per stage down in the twenty-five million range or less.

According to Av Week, NASA can extend the contract to 23 stages for a total price of $1.125 billion.

Those figures do not include avionics, however. Av Week notes that there's another major contract competition for Instrument Unit Avionics development, which is estimated to be a $1 billion project.

I wonder if it includes engines? Since NASA has a separate engine development contract with Rocketdyne, they may be procuring the engines separately as well.

This contract does not include the engine or the avionics. Not that good of a deal for an upper stage structure.

C'mon Rand, you KNOW this will cost at least $1.5 billion before it's over. When I worked for a government contractor, we always low balled the initial bid (as did everyone else) knowing that contract mods alone would double if not triple the total cost of the contract. Is it still a good deal at $1.5B? I think not.

Let me see if I have this right - Boeing is being paid $514.7 million to develop 10 upper stages (minus engines and avionics). Later production could get the cost down to about $25 million per upper stage. However, when you take away the engines and avionics, about all you have left are the propellant tanks and structure. Sounds kind of pricey to me.