Well, I think that most people think you're going to work at Chinese sweatshop rates. ;-)
Looking at the economics, if I design my own pedals, get the PCBs manufactured (in China, 4-6 week lead time and the quality is ... interesting, lifting pads, anyone ? ) - I then source the parts as cheaply as possible, take 3-4 hours to build, I spray my own cases, take them up to the local UV printer and pay a small fortune to get logos etc baked on.... yes, I can make a profit, as long as the buyer is reasonable.
Trouble is, they're not. They mainly (experience with synth DIY here) want something for nothing.
That's a lot of work for nothing.
Sorry for taking the thread slightly off topic. I generally find that the moral issues don't crop up if you can't find a decent market for your goods, anyway. I was going to build an add on box for the Korg MS20 Mini reissue synth. Korg originally made some expander boxes in the 70's, they haven't reissued any with the new MS20. I thought yep, design a few bits, box up, there's a market. Then I bounced it off new Korg owners and they basically wanted to pay less for a hand made box than the actual bare enclosure would cost. ;-)
A volume manufacturer can always undercut you.
By the same token, here's a moral argument as well: how can so many pedal manufacturers justify such huge markups 
?
There are a lot of good questions and comments in there. Here are my random thoughts on some of them.
- Most people don't really consider the cost of time to build a one-off. For most, I don't think it's willful ignorance, just unfamiliarity and a more simplistic "what will it cost me" viewpoint. There's also the issue that custom builds usually have very low resale value, so gear flippers will usually want a really low price or will go elsewhere.
- I think a lot of players used to approach DIY builders as a cheaper alternative to the pricey boutique models. With the influx of cheap, Asian built pedals, the cost of entry for a lot of these circuits has changed and now it generally works out only when customers want a true custom option not something that is simply less expensive than a boutique pedal.
- The pedal manufacturer pricing is an interesting one, and one that I have a bit more insight into as a small volume manufacturer. Certainly, if you build in quantity, it gets cheaper, but not necessarily as cheap as you'd suspect. I've long leveraged 100 piece price breaks for components in my DIY building, so that doesn't actually change all that much. Plus, you need to factor in the cost of components + the cost of running the business + dealer markups (and distributor markups if you go through distribution). As the company gets larger, you need to hire more employees to help build, or you need to automate, both of which cost money. Certainly, it's a lot more efficient than building a 1-off, but it may not be exactly as you'd expect. For the small guys, it gets thin pretty quickly. Without going into brutal detail, by the time everything is factored in, the raw cost of building a FFX pedal is more than I can build a single pedal myself for, although that's ignoring the amount of time spent. If I really priced out the time I spend on one-off customs, I would certainly go do something else (basically anything else would pay better). That's on me, because I am somewhat slow and methodical.
For the bigger companies making 500-1000 pedals at a time, the costs definitely come down, but they still have to deal with dealer/distributor markups and the costs of running the business. Of course, I'm ignoring the really silly $400 3-knob overdrive types.
