It's usually based on the cost of the fabric - which has increased considerably over the past couple of years. The shop owners also have to factor shipping costs into their prices. If you have a FQ for $1.50, that's the equivalent of $6 per yard. When was the last time you bought fabric for that price (unless it's on sale)? With fabric generally being priced at $13 a yard or more, a price of $3.50 isn't a surprise to me.