>I've done custom development of products and the cost to produce a board and fill it with components is just not that high, even for small quantities (dozens), let alone larger quantities (hundreds or thousands).
Dev. boards are typically sold at most in the range of hundreds or thousands. And you often need several variations of them. And engineers designing them needs to be payed their salary.
>In my opinion, they should not be looking to make a profit on development boards, they should view them as 'loss leaders', selling them as cheaply as possible to encourage more developers to use them. I'm not saying that they should loose money on them, but they should be at or close to break-even.
They ARE working close to break-even. Dev. boards are simply not a significant revenue source for most companies.