However, there is absolutely no relationship between how much it costs to produce a product and how much the public is willing to pay for it. The buyer determines the price -- not the seller.
If enough people weren't willing to pay $1200 for a Colt SAA, then Colt would have to lower the asking price. If they couldn't make a profit at a lower price, they'd probably stop production.
I think the only reason Colt is still in business is that enough people are willing to pay a premium price for a product that has uncompetitive manufacturing costs. The fact that it (apparently) costs so much more to produce a Colt SAA than a Ruger Blackhawk has no relationship to the quality of either gun.