DavidinCT (If you are the same person, I remember you from the old original Green Button a long, long time ago when I was more active on forums),
I sincerely believe the cost to make (not design or engineer) these phones is in the mid-high $200 range based on what I have read it costs to manufacture an iPhone 6. NYTimes posted articles that have been on ZDNet and other sites stating that the original 6 plus was $215 for the 16gb model.
...not active enough to post a link yet...
Of course there is design costs and other factors.
Microsoft's application ecosystem is clearly trailing Google and Apple. We all know that. We also know it is NOT only about the hardware. If Microsoft wants to expand their phone use they need to find the price point to interest someone to buy one not for the hardware, but for the hardware AND lack of applications; that means a lower price than Google or Apple charge. An iPhone is worth $650 and more to so many people not because of the hardware but because of the combination of hardware and software.
Microsoft needs to do some soul searching if they want to be in this market, or they can make this their hobby like Apple did the Apple TV for so long - lead this at a loss like milk at a grocery store to get customers to come in or sell high and HOPE that someone will look at the product. Microsoft has the ball in their court. When an iPhone launches they cordon off the Apple store and it is like getting into the new hot night club. When a Microsoft product launches the Microsoft Store still looks empty (at least the few in Arizona do). The biggest draw MS had was for Mackelmore here...