What you're actually buying
A logo for a few dollars is usually a ready-made template from a library or an icon-plus-font combo with no research behind it. It might look fine in the seller's portfolio, but there's no answer to "why this, specifically" — and it's very likely not unique, since similar marks are already used by other companies in other countries.
A logo in the $500+ range from a practicing designer includes: understanding the task and audience, a competitor scan, 2–3 distinct concepts, refinement of the chosen direction, and final files in formats that actually work for print, web and social — vector files, not just a picture.
What drives the price within that range
From there, price depends on specifics: how complex the niche is (an abstract tech startup mark is usually faster than a complex product with history), whether naming needs to happen alongside it, how many rounds of revisions are included, and whether the logo ships with a mini usage guideline or as a standalone file.
My benchmark
My logo design starts from $500. That includes a brief, 2–3 concepts, refinement of the chosen one, and final files in AI, SVG, PDF, transparent PNG and JPG. Turnaround is 7–14 business days from payment and brief.
When a cheap logo is actually fine
Honestly: if it's a placeholder for a project that might not take off, or a personal non-commercial project with no brand ambitions — there's nothing to overpay for. The difference becomes critical once the logo has to hold up on signage, packaging, a website, merch, and years of use — that's when saving on the initial design turns into paying for a second one a year later.