I guess somewhere along the way someone worked out that if a domain is registered then it is probably something someone might want (as opposed to a completely random selection of characters).
So they decided when a domain expires they would register it for the wholesale price then bump the price up to some amount people would pay if they really wanted it. So their $10USD investment in a .com could give them $200USD, and it only needs to work out in one out of every 20 cases to break even.