Lugers were never cheap...
 

The picture is from a 1908 Sears catalog. Adjusting the price for inflation in 2007 dollars, the luger would sell for $537.58 today with no price rises other than inflation. It was more expensive than the S&W back in 1908...
http://home.neb.rr.com/fansrus/luger1908.jpg

I had a copy of the same catalog... Can you imagine, not only is the Luger expensive, but they want an additional $0.48 for the postage! Outrageous... no wonder sears is in financial trouble. :D

Mail was expensive (and untidy) because the prime-mover was fueled by oats. In 1908 Germany the mod.'06 .30 Luger sold for 80 marks and the imported .38 S&W for 86.5. Big mark up on both sides. Cheers!

I don't know how to measure the cost of making a gun. Today, making a gun using old forge + milling + hand matching + rust blue method.... $537 retail price? Sounds impossible.

The $537 is only an inflation figure. It doesn't take into consideration labor, material and high-tech machinery increases or costs we have today.

Years ago, I almost bought a NIB Mitchell Arms Parabellum-like stainless, probably under the influence of a book "9mm Handguns", the author's opinion on Mitchell was very high..... excellent steel, accurate, CNC made, etc, etc. If I remembered right, the dealer wanted $600. The only reason that I did not finally buy was because the seller refused to include the holster in that $600 deal and asked extra $30-$40. I bet NIB Mitchell is more than $600 now.

If I borrow Ron's signature.... that's a real "reproduction".:)

Mitchell Arms Lugers never did achieve a good reputation, as they have always had many problems. You could probably buy one for less than $600 today. I sold my last one for $400 and it had three spare mags.

My estimate: Building a luger today using high quality steel, a nice original style rust blue and German labour, a luger would cost between 10,000 and 15,000 USD.

This is pretty much in line with the price of the new Krieghoff Parabellum...

You'd lose that bet. The Mitchells are generally considered to be pieces of junk. I had the great misfortune to own one and couldn't unload it fast enough. I did however inform the buyer that it was a POS and he bought it anyway.