I suspect assembly labor costs are only a small portion of the price of a model. Economics is complicated. In our hobby, there are other things that contribute to price:
1) Supply and demand. See ebay for examples. Basically, if someone is willing to buy it at a certain price, they will sell it at that price.
2) Lack of competition. In this case - how many other 0-8-0 choices do you have? If you want an 0-8-0, fork over the money for the proto, or go find a brass model for even more money.
3) Shelf-time. If items don't move very fast, the cost of having them in a warehouse or a store shelf somewhere costs money.
4) small volume problem #1 - if a manufacturer doen't sell very many of a particular item due to lack of demand, he/she must price according to what money they need to support their career. People need to earn a salary, and they will charge whatever it takes in order to earn that salary.
5) small volume problem #2 -tooling and engineering costs, and tooling and engineering labor costs. Making injection molds is a very costly endeavor that requires expensive machinery, expertise, training, and software. The more items that are produced, the more these costs can be divided and reduced per unit. If a manufaturer makes 100 of an item, these costs get divided by 100. If 10,000 are sold, the cost gets divided by 10,000. I suspect most of these costs are also passed along to the consumer for the first few runs of a particular item. Why? Because the manufaturer has to pay off its lenders. Once the tooling is paid for, the item can be produced for the cost of labor plus the cost of materials.
6) shipping costs
Kevin