To me $500 would go a long way to realising some of the quilts on my "to do" list. Personally I couldn't justify the cost and participate in a BOM....but I am a bit of a "lone ranger/renegade type"
Personal opinion aside.....I don't think they are a rip-off, not when you take into account the pattern, fabric selection, postage and all the other "business" factors and like others have said, it can bring a sense of community and fun into your quilting life.