Pricing Dilemma

I've been working on a proposal for a government contract at work. As part of the proposal we needed to find a common design core to drop in an FPGA. For those of you who found that last sentence meaningless, let me explain. Digital hardware is often designed like software. Engineers write code that describes the hardware, then tools compile it and put it in a programmable device. These devices are expensive, but if you make a mistake, you can change the code and reprogram the device (an FPGA). Sometimes, if you want to put a common interface or common function in an FPGA, it makes no sense to spend a couple months designing it when you can just buy the code from someone who has already designed it. This is my first experience with buying these "cores" and I have a question. Does anyone know how in the world they price these things?Most companies have quoted me a single price, and I can use the core on as many FPGAs as I desire. For government work, like this proposal, the quanitites are much smaller than for consumer applications. So we can't spread the cost of the core over many many parts. I expected a price around $20K, and the price I got was nearly ten times that! But here is what I don't understand. This company has already done the work, and the marginal cost for them to sell us this core is extremely low. The price is way too high, and we probably will not buy it. However, at whatever price they sell it I would think they would make a profit. Of course, if they kept offering a lower price then we would keep holding out for a lower and lower price. So I wonder, how do you price IP like this? And why would they use a single fee price instead of per unit royalties?