Cheap is entirely comparative. I would say a £1000 PRS Mira was cheap (for a PRS, for a US made guitar, compared to the equivalent quality Gibson etc).
But a £79 Chinese Tele copy is also cheap........
exactly. i prefer to talk about value. something at £250 isn't cheap if it's utter cr@p, while something at £350 might be if it's actually good. too many people seem to equate value with how cheap something is, and that's not right at all. if it's cheaper, but doesn't do the job, it's actually terrible value, as you'll have to fork out for something which will do the job later anyway. this probably explains why tesco etc. do so well... :(
generally speaking, if it's under £200, i'm willing to have fewer expectations (e.g. my valve junior) etc. but much more than that, and i want it to be perfect- if not, you've wasted quite a bit of money which you could have put towards something which was.
my price bands are, more or less:
<£200: cheap (willing to accept slightly lower quality, as long as it's decent and worthy of upgrades)
£200-~£600: Mid-price. I'd expect to get a good guitar for this, but would be willing to upgrade the electronics and pickups (not much else, though- upgrade much more than that and you could just get a better guitar)
>£600: expensive. Mainly because I know that, once I'd swapped the pickups, I'd be near enough within range of another custom legra. Basically anything much more than £600 would have to be spectacular for me even to consider it.
I guess I'd have a similar range with amps...