> USB connectors alone are almost 1$ in qty 5000

Really? They are 40 cents, in quantities of 1. From Jameco, who are not known for their low prices. [1]

Your $4 for headers is bunk of a similar magnitude.

> I cant find an ARM11 chip for less than 10$ on octopart

This is true, but 500MHz Arm11 chips are only $11 in reasonably small numbers. [2]

I wish I was your supplier - you are putting their kids through college.

[1] http://www.jameco.com/webapp/wcs/stores/servlet/Product_1000...

[2] http://search.digikey.com/scripts/dksearch/dksus.dll?Detail&...