Projector lamps are expensive because simply said, projector lamps are expensive to manufacture. This is because projector lamps are made of borosilicate glass and fused quartz. Because quartz is tough to work with and is very hard, special equipment, which is highly expensive, is needed to heat and mold the quartz.
Scarcity of projector lamps drives their price even higher. Manufacturers protect their investment in expensive materials and time by enforcing high quality standards. The highest acceptable failure rate in the projector lamp industry is around 0.4 percent lamp failures per batch.