What makes guided missiles so expensive? Its the guidance system, by a large margin. Typically, 60-70 percent of the cost of a guided missile is the electronics. Another 8-12 percent are the controls (that move fins, flaps and the like). Thus 70-80 percent of the cost of a guided missile is the guidance system. Actually, if you include the fuze, which can cost as much as 8-10 percent of the price of a missile, the guidance system is close to 90 percent of the total value. This would be the case when the fuze itself detects the approaching target, and detonates the warhead (1-4 percent of missile cost), thus making a near miss a hit. The airframe (the structure of the missile) and the rocket fuel, typically account for only 10-15 percent of total cost. Most guided missiles cost between $50,000 and $1,000,000, and the price is falling. Cheaper and more powerful electronics, as well as growing experience, are the cause.