

Compensation for engineers in the Bay area will average much higher than $200k, and that’s not counting benefits (medical, etc.). So cost to the company will be way higher than 200k/employee.
For a project that has hardware, there will be large expenses associated with that — custom silicon has huge setup costs, for example.
Some tech has followed this pattern. For example: entry level Mac laptop in ~2000 was the iBook, priced at $1599 ($3k+ in today’s dollars). The current entry level Mac laptop (M4 Air) starts at $999 — cheaper in absolute dollars, and way cheaper in relative dollars.
(Macs are just an example since Apple doesn’t have a very extensive product list, so there’s only one “entry level” laptop to choose from. And yes it’s fair to ask if the relative specs have just gotten worse, but I think this is also the opposite — the iBook was iirc criticized as being underpowered, whereas the M4 Air is afaik well regarded.)