Yes - some people get their nephew to build a modern, well coded, SEO-friendly and accessible, ajax-driven, e-commerce site for $800 but they probably just got lucky. A lot of nephews get out of their depth and never deliver.
And yes - some people spend a couple of million on the project with the same specs and get given a piece of crap in return. But on the whole - like good whiskey - the price tag is a good indicator of quality and a good way to reduce risk.
So - like many areas of enquiry - anecdotes aren't incredibly useful. If anyone has got any tips on finding the magic nephew, however, I'm all ears.
The magic nephew may be rare, but my 25 years worth of anecdotal evidence suggests the latter example is quite common. And it's this experience that makes people very wary of spending a lot of money on software development.