Yes, and it seems clear from the article that this was understood going into the project. They got screwed when their production volume dropped from 50,000+ (viable for injection moulding) to 2,000 (not viable for anything), after it became clear that the product they had designed was not sellable in the market.
The whole point of Kickstarter is supposedly to let people fund projects that require a minimum investment to be feasible, without their money going to waste if that minimum isn't met.
If they knew their business model was only viable with 50,000 orders at $99 each, they should have set their target at $5million. Anything else is dishonest and deceptive.
$10k buys you a LOT of tooling there and they'll do the maintenance on it if it starts to wear. Yeah you pay more per part, but who cares if it's a $0.20 or a $0.30 part when you're talking about going from $1 to $0.10 of overhead per part.
This whole thing reeks of massive, gross incompetence.
