Try these guys,
www.psi-cases.com, they *might* be able to do it cheaper for you, but probably not. Email them a picture and see what they can do. Tell them it doesn't have to be die cut.
Yes, that's a pretty realistic cost. Unless you set up a die (money) to cut the foam, you are looking at a lot of labor to fabricate those cushions. Also, the little retaining straps in the lid add a surprising amount of cost, due to the labor
I work for a case company, and the simple case & cushion I designed for myself came up to $650. Better (lighter/stronger) than a Pelican, but I'm not paying that much.
My Pelican 1750 came with 1 piece of foam in the lid, and (2) 1.5" thick layers in the base. The case came with 2.0 pcf grey polyurethane ester open cell foam that is softer and less expensive than the closed cell those guys are using.
You don't want the "pluck-n-pick" foam. It's easy to work with, but in a few months or so you will start having pieces break out.Open cell like this actually provides better cushion when you are filling up the case. That's why you see stereo equipment and such come with end caps of open cell only. The closed cell foam is so stiff you have to relieve it some. Basically, the case you picture will mechanically protect the gun, but won't offer a lot of shock protection. Luckily, guns are pretty tough and don't need it.
For cutting foam yourself, the key is a very sharp knive, laying out your cut, and a steady hand. A break-off blade Olfa knive works well, or you can use an electric knive. I don't really like the electric since foam dulls the blades quickly and you can get tearing instead of cutting. The hardest part is keeping the knive vertical. We cut most of our stuff on bandsaws. The Knights case has die cut foam, which is a good way to go but involves the cost of a tool.
Hot knives are used sometimes for the closed cell foam. Basically they can be as simple as custom tips on a soldering gun (the wire type). But hot knives are HARD to work with. Not for a beginner. I've had lot's of fun trying to modify cushions for customers. Unless you do it for a living, it's not easy working with cushions and making them look good.
The closed cell foam is much easier to cut, and you can take a heat gun to seal the edges when you are done, which will cover up some mistakes. I've heard you can chill/freeze the open cell foam to make it easier to cut, but obviously our factory doesn't do it that way.
Here's mine that I did tonight. I might still add some items, but you have to be a little careful with the softer foam. You need to maintain enough wall section between parts.