How many small businesses have you worked for? I want to see any of the managers from them tell me that you know the slightest bit about manufacturing...
In any industry $1000 for a prototype of a $200 item is literally never going to happen, nor does a DYE cost thousands of dollars, working in a manufacturing plant for large companies I have realized that they can tell you what they want about the prices but in reality the retail is usually 3x-6x higher than the cost per item (from manufacturer), and prototypes are never more than just over double the cost of the item.
Where do I know this from you ask? Tee shirts, Shoes, Pants, Fishing supplies, Bikes, and Car parts.
Trust me, who ever said that is either gullible as hell or just plain out a chronic lier who demands attention 24/7