I realize that knife that some guy sells for over a few hundred dollars can be easily made for under 20 dollars...
Show me how. I'd love to know! No cheating by replacing a skilled craftsman with a stamp and some slave-wage drones either, or trading top-quality steel for generic "stainless". There are several very good reasons that mid- and high-end knives sell quite well, and you seem to have completely missed the point.
I believe a person could make a fair profit making short runs of laser- or water-cut blanks and having them finished by skilled machinists/assemblers. Bark River Knife and Tool seems to be doing pretty well with a similar approach. But I think you would have to focus on quality, as BRKT does. If you're going to compete with the Chinese factories based on cost alone, I think you're in for a long and bumpy road.
You're assuming that (if) you can get blanks cut for $10, you can then finish-grind, heat-treat, polish, wrap and provide a sheath for another $10? With all due respect, you're out of your tree.
I don't think anyone here is trying to rain on your parade, but you before you get huffy you might want to consider that these folks represent decades of experience in manufacturing, craftsmanship, and running businesses. And asking independents/small shops how to undercut them is not all that conducive to a productive discussion.
EDIT: I agree 100% with Patrice, Mike and Dave about the competition issue. These people around here have bent over backwards to help me get started, even though I honestly intend to compete with their work at as near to their level as I'm able. They are not "terrified" of you, me, or anyone else.
