You guys saying they aren't really expensive...I don't know what planet you are from. Not trying to be insulting. The way in which I think they are very expensive is looking at bike build up. Buy the time you buy any complete groupset of mid-level or better components (say 105 Shimano) you can nearly go buy a brand new bike with those components for the same or nearly the same money. Guys aren't giving away wheels, frames etc. So clearly there is a tremendous additional mark up on components vs their cost of making them. The makers are making a profit on supplying components on new bikes. They are making an obscene killing on parts purchased separately.

One can say whatever the market will bear, but they are making sure to extract maximum profit. I guess if they couldn't sell them then price would come down. So it could be a question turned around to ask, "why do people pay what they cost?" Nevertheless, on the other end, trying to build up from a frame or upgrade components on a bike I already own and like, I feel like I am a mark more than a customer. There are three main manufacturers and clearly they form an oligopoly. Prices should be a good bit lower if there weren't a lack of real competition.