Outsourcing: costs vs. value

Alex Polonski in Outsourcing Quiz: Cheap Vs. Good considers the "cost" aspect of outsourcing. He asks:

Why should I pay $1000 for this bit of software if I can find somebody that will develop the same for as much as $200?

While the logic of this questions is pretty legitimate, there is another side. Each product (or service) costs as much as customer is willing to pay. And that price of selling is not necessarily connected to cost of production. Price at which you can sell your product is determined by value it gives to customer. Water in a desert is worth much more than the same water near mountain spring.

If for your product it is not that important how much you pay for engineering, then probably you should not be doing that product as it fails to deliver value to its users. Isn't it?