There is diminishing returns to a point but there are other issues that people don't understand. Like small batch production will cost more because they are not being mass produced. More often than not they have better quality and resale value because less are being made.
Custom knives are being made by someone not on an assembly line and your paying them labor and can get it customized with some things like colors or shapes in the makers own style.
A good budget knife won't be anywhere near as good but a decent budget knife is $40-60 but it's rare to find good quality control and other issues happen.
I spend around $200 give or take on average for good knafs. Which is basically the point of diminishing returns.