That was not promised from Falcon. The upper stage is not reusable and is 20% of the hardware cost, so at best Falcon could reduce costs by a factor of five. Plus it runs a dirtier fuel so it needs more refurbishment. What they did expect from Falcon is to be significantly cheaper than any other major launch provider, and they achieved that, but there's only so far you can go when you're building a whole new upper stage for every launch.

Orbit is hard but the actual fuel cost is not all that high. If you have a rocket that's cheap to build, and you can amortize that cost over a large number of launches, you're mostly just paying fuel and ground services.