Once you go past a certain price point, about $400 with a maple shaft and $800-900 with a quality carbon fibre shaft, you pay for the work, materials and complexity of the design. A basic Viking or Joss is just shy of $400 and these cues plays great and are well made. If you pay a bit more, you'll get a lower deflection shaft. A quality carbon fibre shaft will double the price, about half of my customers feel it's worth the price. I have never claimed a more expensive cue will make you a better player, but if you're outside the average height bracket, have very small or large hands you will benefit from having equipment that suits your particular needs.
The argument you shouldn't pay more than X, can be used about almost everything, that doesn't change the fact that people pay for 600 HP cars, fountain pens that cost a decent salary and so on. If you pay for a higher end cue, especially a custom cue made by a cue maker, you pay for their time, skill and the materials. A 18" piece of a nice wood can easily be $100-300, so the raw material cost can be alot more than a basic production cue. I seriously doubt people who drop 3 grand on a cue expect they will become a better player over night, they spend money on a nice cue for the pleasure of having a precision instrument crafted to their specifications and they enjoy that part of the hobby.