It is an undebateable point. Higher cost skin care products have more R&D and higher quality ingredients. If you do not need them then that is fine, I am ALL FOR cheaper stuff. I know several people at zirh, aveda, anthony for men, and kiehls who tell me first hand, they are making no more of a % than supermarket brands like neutrogena. If things "work" for you then there is no reason to spend more, however, I am exposed to people daily who need perfection and swear by name brands. For these people the higher end products are a veritable necessity.
You can look at it economically. If you understand the concept of consumer surplus... there is a high end market willing to pay much more for quality product... whereas that same quality may be worth less to other consumers. The consumers who place less value on the product will spend less. The extra money spent by the high value consumers is going directly into development costs as the profit margins of both companies are similar.
To further validate my point, I use many a supermarket brand. I find that cetaphil lotion *for example works great for body and facial application.. I, therefore, would NOT purchase a 40 dollar bottle of Kiehls lotion in this case.