My first ever cosplay was Pyocola from Digi Charat, my mom helped me make it and paid for just about all of it so I am not sure how expensive it was. My guess is that it was well under $100 though since we modified stuff we already had and only really made the hat and apron, I also didn't wear a wig :P
I don't think there is ever a "too expensive" as long as you have the money for it and you are happy with your costume. I try to keep my costumes under/around $200, but I've made a couple in the $300-500 range and I feel it was worth it since they rocked!
If you are worried about it being to much money, get your money's worth out of it. Re-wear the costume multiple times and add a little each time to improve it. Not only do you end up with a way better costume after a couple wears, it prevents you from spending on a new one! For future costumes you can lessen the hole in your wallet by starting as early as possible and investing a bit here and there - for example saving $20 a month to go toward a costume. $20 is pretty much the cost of a night at the movies and you probably won't think much about spending it / putting it aside but that is $240 over an entire year and more than enough for most costumes!