After the first $100 or so you're paying more and more for less and less. That doesn't mean it isn't worth it (only you can decide whether or not a knife is worth that you paid--who cares what other people think?) but I think if you're looking at it realistically, the differences get smaller and smaller the farther you move up into the "luxury item" range of cost.
I had a stainless CRKT Drifter (~$20), Spyderco Sage 2 (~$200) and a Chris Reeve Sebenza (~$400) at the same time. All feature similar capabilities. All three are metal handled frame lock knives, meant for cutting things (something that all three are pretty similar at performing, if sharpened properly). I admit that I'm rounding off the prices a little for convenience.
The $20 knife (Drifter) handle is made of steel, not titanium, and the blade steel is on the low end.
The $200 knife (Sage 2) has much better fit and finish, and better materials too, a titanium handle and better blade steel--then again, for ten times the price it should have better f&f and materials. It certainly feels like a superior knife to the cheap knife.
The $400 knife (Sebenza) has ever so slightly better fit and finish than the mid-range knife, and uses the same materials. The difference is there, but it's not a big difference, IMO. Maybe, if I'm being really objective, it's 5-10% better feeling, at twice the price.
Throwing one more in as a kicker, a decent custom in the same type of knife might run you $600 - $1000 or more for similar, or even in some cases lesser, materials, albeit with superior or equal fit and finish (hopefully) but certainly with other appeal.
The value of a knife, like anything else, is dependent on what someone will pay for it. A Sage 2 is definitely not ten times as useful a knife as a Drifter, but Spyderco sells plenty of them. Similarly, a Sebenza isn't twice the knife compared to a Sage 2, but Chris Reeve isn't having any trouble moving those either. Watch the exchange and you'll see how long they last when posted (not long, often close to MSRP for previously owned in newish condition).
I say go straight up to the more expensive stuff. Get a Sebenza or something else so popular you can always get your money back. A mid-range knife might ruin you for later. I have to admit to being a little disappointed with the Sebenza, for example, and sold it. It didn't blow my hair back, in part because it didn't really replace anything else I owned well (not as pretty as a William Henry, not as fun to carry as a Southard, no more useful than Sage 2, etc.).
So save up, buy a Sebenza first, I say. You'll probably love it, and worst case you can sell it off and buy 2-4 mid-range knives and suddenly have a mid-range collection
