Yup. The obvious point is when you regret buying the knife, or just don't get the enjoyment out of it that you should.
Sure, you can "get the job" done, eg, cut stuff, with a 5 dollar knife just like you can with a 300 dollar knife. But that doesn't mean that they're the same in terms of quality, etc, or that there are diminishing returns. It's all about what you want out of the knife.
Some have the philosophy that they just want something cheap that they can abuse and not feel bad about if they lose it or break it. They don't particularly care about ergos or durability or edge holding, and aesthetics, fit and finish, etc, take a distant second. They can't have anything too flashy or high quality because they'll be too worried that they'll break it. This kind of person generally won't buy a 100 dollar knife, and you'll find them posting threads about how their Kershaw Cryo is just as good as anyone's custom Hinderer. If a cheap knife gets the job done, great. But then, if you're being honest to yourself, you also shouldn't be buying any new knives until the current one breaks, if you're really in it for saving money and getting the job done at a low cost. As always, you get what you pay for applies. And if you're paying for 10 cheap knives, that screams to me that you really should have spent the cash on the 1 expensive knife, because that's, deep down, really what you were looking for.
Then there are other people, who like a higher quality knife, and have specific features that they're looking for, and take care of their tools, so they're not as worried about losing their knives. Truthfully, if you're the sort of person who's careless or irresponsible enough to lose your knife on a regular basis, you probably shouldn't be buying expensive knives, so I can't fault you for that. For this class of person, who still uses knives as tools, and is more invested in having a perfect cutting experience every time than in pinching pennies, there's a pretty wide range of knives that they may be interested in, reaching up to full-on customs, just so you can get the features you like. This is probably my category. For instance, I like easy open and close knives using an AXIS style lock (although lock style is the last item on my list). I like flippers, and pretty much won't buy non-flippers any more. I won't buy anything that has blocky scales that haven't been contoured on the 3D level, which unfortunately rules out most production knives, and I won't buy anything with poorly placed jimping (say, right below the flipper, so you can bark your fingers on it every time you deploy the knife). I also want something that maximizes the amount of blade I get out of the handle size. I like the smallest package I can carry and still get a nice big blade. I also like a good durable steel that will take and keep a good edge, but still be easy to sharpen. M390 is fantastic stuff. I'm currently using an S90V, which is tempered very hard, and will be a devil to sharpen, but also should keep a good edge for a long time. And, it's got to be a well-made knife that I know I can depend on to work for me every time. Which means, really, good fit and finish are central. All of that together, and you're looking at a fairly expensive knife. The thing is, I know exactly what I want, and at this point, I don't have to fret about buying multiple expensive knives. I only buy one folding knife design, and have no inclination to buy any others on the market right now.
Then there's the collectors. Sky's the limit here. These people love steel for its own sake, and love to see it dressed up. Aesthetics gets a mention here, where it's generally less important in other categories, secondary to the utility of the knife. Now you're buying knives for their own sake, not as tools, but as things that you love. Which, let's be honest, we all probably have a little of this. This is the person who will happily buy a 10K dollar custom and never be unhappy about it. When you're shelling out that much money, you're probably getting exactly what you want. However, since you're not using the knife as a knife, you don't have to worry about finding that perfect knife for you. You can just buy things that catch your eye (assuming your pocketbook will support such behavior).
So to answer your question, it's all about what knives mean to YOU. Are you the "I'm on a budget and just want something to get the job done" type? Are you the "I want the perfect carry knife for me that I can love every time I use it, because I want that perfect cutting experience?" Or are you "I just love knives, and want to collect things that I want?" Or something in between 1 and 2? Eg, I'm still looking for the perfect knife, and don't really know what I want (that's the sort of person who keeps buying 50-150 dollar knives to try out different features).
Sure, there can be diminishing returns, but that's entirely dependent on where and what you place value upon on your knives. Value is entirely a matter of perspective to the individual, and depends on individual biases. There's no one knife that will be perfect value for every person. For instance, CRK's are nice knives, but I already know they're not for me. Handled them on numerous occasions, and they just aren't right for me. But then, I'm not a collector, and a CRK is probably a good thing to have in a collection. Ball's in your court. What do you want out of the knife? Is it a good fit for you? If so, then it's probably going to be worth the money. Are you buying it just because it's well-liked by other people, but it's not really a good fit? Then I'd stay away.
