The last time I checked Price was a function of supply and demand. Cost of production is not a direct part of that. I can make a twinkie like product in my kitchen for about $6 a twinkie. But, I doubt if many people are willing to pay that price plus profit just because I have high costs. On the other hand, if people are willing to pay 50 cents for a twinkie and I find a way to reduce costs by 7 cents a twinkie, why should I reduce the price? ( Well, I might want to expand the market penetration or run a competitor out of business in order to help my long term profits).
Obviously, pricing is not quite this simple, but the idea that price is only a function of cost is correct. Supply and demand are what count. Costs influence supply, of course.