Smaller size reactors are going to be an important component of the worldwide nuclear renaissance. However, a misguided interpretation of the economy of scale would label these reactors as not economically competitive with larger plants because of their allegedly higher capital cost ($/kWe). Economy of scale does apply only if the considered designs are similar, which is not the case here. This paper identifies and briefly discusses the various factors which, beside size (power produced), contribute to determining the capital cost of smaller reactors and provides a preliminary evaluation for a few of these factors. When they are accounted for, in a set of realistic and comparable configurations, the final capital costs of small and large plants are practically equivalent. The IRIS reactor is used as the example of smaller reactors, but the analysis and conclusions are applicable to the whole spectrum of small nuclear plants.