There are many reasons why the pricing varries between $0.50 - $5 / proxy
###Reason #1 - Order Quantity
The more customers a provider has, the more employees they need to hire and pay/hour to respond to support emails. If you order just 1 proxy, you will likely require the same amount of support compared to a customer with 1,000 proxies. Because of this, they need to make up for losses, and charge you a premium when ordering small quantities.
###Reason #2 - High or Low Quality Support
As we all know, support requires staff, and staff cost money.
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Providers that offer great support usually tend to charge less for their proxies
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Providers that offer horrible support usually charge less for their proxies.
###Reason #3 - Misleading Providers
Some providers are trust worthy and some will lie to you
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Some providers will sell you a private proxy and secretly resell the same proxy to double their profits. These providers tend to sell their IPV4 proxies for a lower price to attract a larger customer base.
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Some providers are honest, and will never re-sell your proxy to someone else. These providers still need to make good profits, so they will charge a higher price for their honesty.
###Reason #4 - Providers Marketing Plan
Every provider has their own business/promoting plan.
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Some providers choose to offer an affiliate based system so others can promote their proxies, and make a commission. This increases their sales dramatically, HOWEVER they loose money on each sale. To make up for their losses, these providers tend to increase their pricing to lower their losses.
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Some providers choose to promote their services with CRAZY DEALS. First they start with doubling their cost for their proxies. Then they share 50% off coupons EVERYWHERE. The provider does not loose any money (since they previously doubled their pricing), and they get more sales, because EVERYONE likes a coupon code.
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Some providers choose to receive organic traffic simply based on their low pricing. They dont offer coupons, nor do they offer affiliate commissions. Just low pricing. People will share this with their friends and family, and the provider get sales.
###Reason #5 - Re-Selling Proxies
Small proxy providers will not have enough money to setup their own servers. Instead they will go to larger providers, and rent some of their servers/proxies. These smaller providers have to pay more/proxy since they are buying it from another provider at wholesale cost. Because these smaller proxy providers need to pay an inflated price, they need to sell their proxies for higher to maintain a steady profit.
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Just like how a small corner store will sell a bag of chips for $5, when WallMart will sell them for $2.
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The small corner store cannot buy the same quantity as WallMart, so the corner store needs to pay more, thus they need to sell it for higher to maintain the same profits.
#BOTTOM LINE
You Get What You Pay For 