I used to have a hard time grasping the concept of paying so much for a bike. I had a Pacific hardtail that was about $150 at Target and I rode the heck out of it for years with no problems (kind of wish I hadn't sold it truthfully). Once I did finally go nuts and splurge on the Giant I was blown away by the difference! When people ask me about the price I'll usually be pretty honest about it and if they get into the "you're crazy" argument I just tell them I look at it as an investment in my health which is well worth the price IMO.
My parents started with that argument recently until I brought up the fact that all of my bikes combined cost about the same as what my brother just spent on a new TV. That pretty much ended that discussion