Haha yeah, manufacturing...This is probably the most annoying process of running a business.
The pricing you mentioned doesn't surprise me. $700 each if you order 20, $90 each if you order 200, and $27.50 each if you order 2000. I think you guys are right about the mold being costly, but something I know (as a research scientist, nothing to do with business) is that when you order something to be manufactured, its always much cheaper if you order a lot than to order a small quantity.
The reason isn't (wasn't) the mold, though. The reason is because the factory had to stop production of whatever they were making, set the machinery up for your item, and produce it. (Only to deal with the hassle of changing it again when your order is complete.) Since setting up the machinery/stopping other production costs them money, they charge you a lot for small quantities, which is why its better to order in bulk. (And what would happen for scientists that needed a certain item is a bunch of these scientists would get together, buy something in bulk, and split the cost of the item being produced; since no one ever really needed a lot. Of course, you don't have the luxury of splitting the cost with anyone since its just your item...)
Anywayyy. It's hard to really decide what you should do. Obviously the optimal thing would be to order 2000 for the best price, but the problems are:
1. Will the product sell well enough that its worth it? (And not necessarily that you'll sell all 2000...but if you think you can sell 60 (aka 3 sets of 20), then you might as well pay the extra and keep the inventory. (As opposed to ordering whenever you need it.)
2. Price point is something to consider. You can't really take a loss on selling your item, but you want decent enough margins.
3. Can you afford the mass order?
So yeah, it depends on your current publicity/how well you're going to sell. Of course mass ordering is best if you can afford it (assuming it'll sell eventually!)