No, the price is based on how people value the item, what it costs to make or produce is irrelevant. Why else would people pay $1.50 for a 500ml bottle of tap water when water out of the tap only costs $0.0011/litre (City of Calgary most expensive rate)

Thus AC prices Tango Plus or Latitude at a level that people will pay. The differential over Tango doesn't matter if people percieve the value of Tango Plus makes it worth paying for.

The same as the Toyota vs Lexus arguement, the Lexus brand is percieved as being worth paying more for, and people do. If it wasn't percieved that way Toyota wouldn't be able to sell any Lexus's (Lexi?) at a price differential over Toyota.