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10 year support contract is certainly a good chunk of that

The initial product could be free, and that would still be a decent price for 10 years of any real support.

Yep. Have a look at their hourly rates for systems support [1].

All of the entry level positions are above 80/hr.

This is the price that the vendor is charging, NOT what the person is getting paid.

The vendor is covering insurance, holiday/sick leave et al, payroll taxes et al, rent, management, carrying the risk of the work going away, etc etc.

It looks high, but it's not nearly as profitable as it seems for either the vendor or the employee.

Yep. you're right.One of the many reasons why I'm not in government contracting :)