There are actually a few slightly different pieces of hardware involved. As a starting point though, note that for many years the price of a standalone fax machine, essentially a high-speed (for the time) modem, a 200 dpi scanner and a thermal (later inkjet or laser) printer was typically way below that of those 3 items purchased separately. On the other hand, those 3 items purchased separately could be used for many other things - much as the typical multifunction machines of today. In fact, many of the current MFC machines include fax capability that never gets used by most people, because it is bundled with other features that users want. It is actually cheaper for a manufacturer to include a fax-modem in one of these boxes than to have to stock twice as many different boxes.
Modems vary in speed and capability. Speed seems obvious, except that it isn't. Speed started at 110 bps with acoustic couplers and worked on up to 56 kpbs over the course of many years. Fax machines basically plateaued at 9600 bps, though some made it to 14.4 kbps.
However, speed also includes compression of numerous varieties, which can make a huge difference, particularly if that modem is being used to handle a room full of terminals (each of which separately might be OK with 2400 bps) or large downloads.
But capability varies too. The first modems were only modems. Starting with (or at least the first one to hit it big) the Hayes Smartmodem, modems often included a CPU that could handle auto-dial, auto-answer, compression/decompression and many other things. Those same CPUs eventually could handle fax as well. Of course, then we had the curse of the so-called winmodem - a modem without a real CPU, letting Windows (that wonderful real-time system optimized for handling modem traffic where there is no room for delays...) do all the processing for the modem to save a few $.
The really good fax modems went in the other direction - including sufficient memory and processing power on the board that the entire faxing process could be handled with very little host computer intervention. Those fax modems were not cheap, and it would in fact be a waste to use those where an ordinary modem would do.
On the other hand, many later high-quality modems (my personal favorite was Multitech) could be used as a "regular" PC modem, as a fax modem or as a modem with proper hardware handshaking to work well at high speed with non-PC devices.
One key issue on price of any consumer electronics device is volume. For quite a while, fax machines were produced in high volume as plug-and-play devices. That is quite different from stand-alone modems. Basically anyone could take a fax machine out of the box, plug one wire into power and another wire into a phone jack (and maybe move the phone that was in the jack to a second jack on the back of the fax machine) and done. Then all you do is load a piece of paper, dial the number of another fax machine, and it starts sending. Utter simplicity.
That is quite a different from PC modems. You had (typically) two choices:
- Open up your computer, install a card, set COM/IRQ/etc., install software (which was from floppies), figure out where/what to connect to (BBS, AOL, Compuserve), and so on
- Get the right cable (until the IBM PC came along there were a lot of different cables, and even afterwards there was 9-pin serial, 25-pin serial (but don't confuse it with 25-pin parallel, null-modem (which is the opposite of what you needed, but you might have one around from a printer, just to confuse things)), plug in the modem, configure your serial port (since it might not have been configured correctly originally - if you didn't have a modem it usually didn't matter), install software, etc.
Not a trivial task for the non-geek. Which meant fewer standalone modems were sold than fax machines, at least for regular consumer use, for quite a while.