Eh, the price point makes perfect sense, for the target market it was going for. Nintendo just botched its estimate of how big that target market would be. Raising the price would have only made it less attractive to its intended demographic. The problem was that, since Nintendo under-predicted its sales by a *lot*, its intended demographic never actually saw one. Higher price would have done nothing useful, only larger supply.
As for why this soon before the Switch? I suspect its because "We want a major product for the Christmas season". Nintendo probably knew, upward of a year before, that the Switch would not be ready for Christmas. So, they whipped up the NES Classic as a stopgap that would be cheap and easy to produce, and give them some good publicity and mindshare during the holidays.
In retrospect? They probably should have manufactured something more like 6 million of them, rather than the 2 million or so they made.