As someone with some idea of the inside of the industry, I'm going to try and write a coherent overview.
I am not Chabad, and as such have no dog in this scandal/debate.
You can go into ANY Judaica store in the US and Canada, and ask for Mezuzos and their prices. Below a certain price point, the Mezuzos will probably have major issues. This is known to anyone who does a little research. The chiddush of the expose is that R' Wolf is picking on the retailers in a certain neighborhood.
What is the price of a Mezuza? After all, its just a piece of parchment and black ink. How much should it cost already, $20?
The Mezuzah Supply Chain
A sofer contracts with a wholesaler who guarantees to buy his mezuzos at a given price. They may contract for a specific number of mezuzos/tefilin each month or whatever the sofer manages to write.
The wholesaler (who has a number of sofrim writing for him) supplies stores that need mezuzos to sell.
There maybe additional middlemen involved, for example a wholesale buyer in Israel who sells it to a distributor in the US.
Some larger stores will have enough demand to do their own wholesale buying directly from sofrim.
At some point in the chain, the Mezuza is checked by a Magia to make sure its Kosher. The widespread custom today is to ALSO have it checked by a computer.
On every Mezuza, all of these people need to make money. 0)The Klaf maker 1) The Sofer 2)The Magia 3)The Computer Checker 4)The wholesaler 5)The final Retailer
The Klaf
Klaf is made either Avodas Yad (hand made) or Avodas Mechona (machine made). The lower level of mechanization, the higher the price of the Klaf. There are other chumros in the making of the klaf that can add to the price of the klaf, but this is irrelevant to the lower level commodity mezuzos we are dealing with.
The Sofer
Generally, sofrim who write for a living are located in Israel. There are sofrim in other countries but they are the exception. The Sofer has the expense of buying the klaf. He may also rent a work area (In EY this is very common).
It takes time to write a mezuza. The faster the sofer writes, the more mezuzos he can sell. The faster he writes the less time/care he takes on each letter in the mezuza. This can lead to issues in the proper forming of each letter, negios between letters, placing the letters below the sirtut (the embossed lines) which can all make the mezuza PASUL - with NO way to kosher it. he may also leave out Tagim (crowns), and look sloppy (a chisaron of Zeh Keli)
The more hours in a day that the sofer writes, the more mistakes he will have, and the sloppier he writing will appear.
The Magia and Computer Checker
Sometimes this is the one person, many people specialize in one or the other.
As with the sofer, the quicker he checks the less care he takes.
The computers also NEED attention. they DO NOT check automatically. They will bring up a list of possible issues in the mezuza. Depending on the neatness of the writing there can be many false positives, (and there can be false negatives, which is one of the reasons that it does not replace a Magia). The computer checker needs click a button two say that he looked them over and it's false positives, or click what the problem is. He the quicker he checks, the more mezuzas he checks, the less care he takes on each one.
The wholesaler
He may carefully select which sofrim he uses, or take anyone who gives him product. He may check that they have Smicha to write, that they have Yiras shomayim, that they know the halachos or he may not check at all.
The retailer
May be a certified Sofer or Magia who knows the halachos, or may just be a salesman.
Like the wholesaler he may or may not be selective in whose stuff he offers for sale.
To summarize The price of the Mezuza depends on:
1)How many Mezuzos the sofer writes a month i.e how quickly he writes. The more, the cheaper.
2)The speed of the magia. The quicker the cheaper.
3)The markup of the wholesaler and the retailer
Below a certain price point, , after the retailer and wholesaler's profit and the sofer's expenses, very little remains for the sofer to live on. He can only make up for this with volume. Volume = speed = lower quality.
It is more difficult to write tefilin than mezuzos, and both are more difficult than a Sefer Torah or Nach. The writing is smaller, and the din of Kesidran makes it impossible to fix many mistakes, if found after the sofer wrote more.
Considering that a sofer who can write a line in a safer torah in 5 minutes, writes REALLY fast, how fast can a sofer write a mezuza which is 21 lines?