Yes, the launch is the real cost driver for space economics. Launch costs alone are in the neighborhood of $10,000/kg for large American providers and somewhat less in other providers/countries. I believe no one has come close to the $1,000/kg mark yet.
Because launch is so expensive, people then spend a lot more money making sure the payloads are ultra-reliable (launching a replacement is just too expensive). Because costs are so high, there isn't enough business to really get good economies of scale (yet...go SpaceX!) - so a lot of money goes into design and testing of new rockets that will only see 10-100 units built.
As for launch itself, fuel is pretty cheap - turbopumps are expensive. It is the high-precision machining of parts that ends up costing you. If you can reuse the hardware, then you get savings for future launches and everyone is happy.
