The last time I bought an electric water heater about 4 years ago, a 40 gallon GE was about $125. I was in a home depot yesterday, and the same size and make is now priced at about $350! Why have the prices gone up so much??
I ordered two of these two summers ago for a little passivation skid we use in the company. I paid $129 for each unit. So I can attest to past prices.
I can also attest that right now, all of the material we buy and use on construction projects are at near-high record levels. The economy hasn't knocked any prices down. If anything, it's all gone up. A length of copper pipe is basically the same cost now that it cost last winter. Steel is the same. Insulation is up. Welding gases are up. Some valves are down, but not the specialty stuff. Specialties are way up. What's happening is the suppliers are propping up prices by cutting manufacturing and production. So they completely stopped making certain valves or pieces of equipment, and laid those folks off, just to prop up the price of the stuff that's in their warehouse or at a distribution facility. They're trying to prop up demand.
Plus insurance has gone up and the actual "price of money" (financing) has gone up, and that get's passed on down the line.
I feel your pain, I am replacing my old 40 gallon unit with a new $260 slim 30 gallon unit from Lowe's, still $350 sounds high unless it has all the bells and whistles. Simple models are $275 or there about.
I'm replacing mine because I have to change the swing of a door and the fat model is in the way, just as well because when I checked the info on the 12 year old unit it only had insulation rated at R5 - newer heaters have ratings up to R16. The payback? longer than I will live.