That depends on the validation and QC of their internal engineering. It is just as terrifying to spend USD120000 on a part that might be no better that what you can design&build in-house.
Here's the background:
There were numerous ways in which SpaceX's strategies diverged from space industry norms, and almost all of them had direct implications for the cost of its launch systems. First, whereas most aerospace companies give their designs to myriad third-party contractors who create the hardware for them, SpaceX produced roughly 80% of its launch hardware inhouse. SpaceX builds its own motherboards and circuits, vibration sensors, radios and more. In most industries vertical integration increases the costs of firms by not enabling them to benefit from competitive bidding between efficient suppliers. In the aerospace industry, however, the entrenchment of norms around using parts specialized for the space industry ("space grade"), and the bureaucratic rules defined by government contractors, had kept supply costs high — very high. SpaceX decided instead to build many of its own parts, or to buy parts not considered "space grade" and modify them to achieve "space grade".For example, rather than paying $50,000 to $100,000 for an industrial-grade radio, SpaceX was able to build its own for $5,000, and shaved 20% of the weight off at the same time.
SpaceX's willingness to produce their own parts came as a shock to suppliers. For example,Tom Mueller recounts a time when he asked a vendor for an estimate on a particular engine valve: "They came back [requesting] like a year and a half in development and hundreds of thousands of dollars. Just way out of whack. And we're like, 'No, we need it by this summer, for much, much less money.' They go, 'Good luck with that,' and kind of smirked and left." Mueller's team created the valve themselves, and by summer they had qualified it for use with cryogenic propellants. "That vendor, they iced us for a couple of months," Mueller said, "and then they called us back: 'Hey, we're willing to do that valve. You guys want to talk about it?' And we're like, 'No, we're done.' He goes, 'What do you mean you're done?' 'We qualified it. We're done.' And there was just silence at the end of the line. They were in shock." As noted, a big factor driving savings at SpaceX is that it often builds its components out of readily available consumer electronics rather than equipment alreadydeemed "space grade" by the rest of the industry. Twenty years ago "space grade" equipment would have had far superior performance characteristics compared to consumer electronics, but today that is no longer the case-standard electronics can now compete with more expensive, specialized gear. For example, at one point SpaceX needed an actuator that would steer the second stage of the Falcon 1. The job fell to engineer Steve Davis to find the important part, and since he had never built a part like that before he sought out suppliers who could make it for them. Their quoted price for the device was $120,000. As Davis recalls, "Elon laughed. He said, 'That part is no more complicated than a garage door opener. Your budget is five thousand dollars. Go make it work.'"20 Davis ended up designing an actuator that cost $3,900. Another example is provided by the computers that provide avionics for a rocket. Traditionally NASA's Jet Propulsion Laboratory bought expensive, specially toughened computers that cost over $10 million each to operate its rockets. Musk told engineer Kevin Watson that he wanted the bulk of the computer systems for Falcon 1 and Dragon to cost no more than $10,000. Watson was floored,noting, "In traditional aerospace, it would cost you more than ten thousand dollars just for the food at a meeting to discuss the cost of the avionics."21 Watson was inspired by the challenge, however, and ended up creating a fully redundant avionics platform that used a mix of off-the-shelf computer parts and in-house components for just over $10,000. That same system was then also adapted for use in the Falcon 9.
About the actuator:
Steve Davis, the twenty second hire of SpaceX, needed an actuator that would trigger the gimbal action used to steer the upper stage of Falcon1. He went to find some suppliers and got a quote a $120,000. “Elon laughed”. Davis said. “He said, ‘That part is no more complicated than a garage door opener. Your budget is five thousand dollars. Go make it work.’” Davis spent nine months building the actuator and the final actuator approved by Musk ended up costing $3900.
Seems like they don't include the engineering time in the part cost calculations - so cheating a bit!
I've experienced building something in-house that is far better than what you could otherwise get. Back in the 00's I wrote a JavaScript framework because the existing ones were all crappy in a variety of ways. Even as a one-person effort (and I'm no 10x engineer) I could write something that was wayyy better in a bunch of important ways (albeit not pretty enough design). My work was engineered better than the open source and commercial frameworks that I evaluated/used. Better loading, better recovery from network and other errors, better memory behaviour, better size, better speed, better integration, better diagnostics, better browser support, better user interface, customised for our needs. It did exactly what we needed for our project and mostly worked flawlessly.