Keep in mind that everything in Spain is much less expensive compared to the US. Especially in a place like Toledo, which has 20% unemployment. They are a family business, with just one guy working in the "factory", so probably minimal employee overhead. Material and tooling costs for making a sword are pretty cheap anyway, even in the US.

Toledo used to be famous for its sword makers, but now all the other shops just import cheap knock-offs from China. So that's why he is called the last master sword-maker.