"the more expensive camera shoots 720p video, has optical image stabilization, and a larger display."
Which sounds like one codec chip that is still too new to be a commodity, one routine that takes a lot of time and effort to get really right, and an actually more expensive part. Additionally, the internals for the video might require a more expensive bus going out to the storage device and possible more cache memory to grease the wheels. I'm not having a hard time believing this all adds up to around $100 of parts and design labor. Maybe it doesn't, but it's enough I'd want to see proof of the claim the customer is getting ripped off.
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"the more expensive camera shoots 720p video, has optical image stabilization, and a larger display."
Which sounds like one codec chip that is still too new to be a commodity, one routine that takes a lot of time and effort to get really right, and an actually more expensive part. Additionally, the internals for the video might require a more expensive bus going out to the storage device and possible more cache memory to grease the wheels. I'm not having a hard time believing this all adds up to around $100 of parts and design labor. Maybe it doesn't, but it's enough I'd want to see proof of the claim the customer is getting ripped off.