[zachallaun]

I think someone demonstrated in the announcement thread that, adjusting for inflation, the Pi5 is going to be cheaper at release than the Pi4.

Ultimately though, at least IMO, the Pi isn't about being cheap, it's about being capable while staying a great value. I bet there's a lot of hidden complexity in the pricing, and it's very possible that they'd have to compromise significantly more than 12.5% of the functionality/performance to get a 12.5% price reduction (to $35).