I agree that the cost seems overblown but having worked on several very small teams I'd be hesitant to start anything new with fewer than four people. It is possible to get things done with a one or two person team, it's just a lot harder because the moment someone gets sick or goes on holiday everything grinds to a halt. If what the team is working on is on the critical path for doing business it effectively becomes impossible for anyone to have a real holiday, if something breaks then they're going to get roped in to fix it regardless.

If you have a four person team you drastically reduce the bus factor. It also means you can have people routinely pairing on things which can be hugely impactful when working on new software in a new domain like this.