The product could've easily been made on their budget. Their problem was outsourcing much of the development work, so they paid consultants too much money to make something that was overdesigned and way too expensive to make. When you're starting in hardware, you need to immerse yourself in the whole chain to be able to make good decisions. Shame, I liked the guys.
More practical discussion of their missteps: http://www.eevblog.com/forum/crowd-funded-projects/kickstart...
I would be surprised if a flash remote cost more than two or three hundred thousand to develop and productise, tool up and do a small production run, but that's assuming you have a team with the right skills. If you're paying contract design houses then I guess it would be a lot more expensive.
I laugh at most hardware Kickstarters because what they are trying to do is impossible with the funding levels you are going to get, so if it is going to be successful they should already have investors in which case they Kickstarter is just a cheap marketing campaign.