Why is the price of new tonearms so high

The engineering,development and marketing cost of the older arms generally was done at a time when product demand was ten to fifteen times greater then today. Current product has a small base of customers that the cost must be recovered on, hence higher prices. Manufacturing cost of the actual arm has never been very high. Given the laws of physics have not changed, most of the newer arms offer little in the way of improvement over the older ones. So, you get little improvement with a new, very expensive arm.

Which tonearms are you talking about? The Graham Phantom II B-44 Tonearm is $4700. The SME Series V is $5300.

Or am I mucking about in mediocrity here?

Those are very nice arms but Im thinking of Venomous prices like twelve Grand and more.

There are various reasons
Marketing
the higher the price the more people think "it has to be good"
Mark up
The higher it is, the more dealers are interested to get it
Quantity
Analog sales are not comparable to those 10 years ago
Quality
Today we have much better machines, more precise and cheaper in production *aehm* did I miss something?

I know most arms, or listened to them, most are not worth their high price (from performance in comparison to other but I am afraid, no one is interested in that).
Analog is on the way to become a "Boutique Product", it's nice to have, the next step of "My Horse-My House-My Boat and it is better to sell 5 units for a very high price than 30 for lower price, less work, less discussions and for final one can say:"Well, you know, it is NOT for everyone"

Price has -unfortunately- not a direct link to Performance.
Marketing has own rules :-)