There would not only be reduced plastic and nickel silver material usage quantities (both of which are purchased in units of weight) but also due to longer production runs the injection moulding machine costs would be lower as there would be fewer tool changes and machine set up costs. Also the cost of stockholding is reduced, and as there are likely to be more sold, packaging and transportation costs will be less. According to your assumptions hand assembly costs will be the same, but as the unit is smaller then the hand movements will not be as great in distance therefore there should be more units made per hour.
I could go on but I believe that there is a price point on this product beyond which a lot of people will not go beyond. In the real world everyone has a budget whether it is for modelling or their own total household budget and £40 is too rich for me, at that price 'I'm out' as they say.