Cam, There are actually a few parts to your question, and it's one I've answered at length elsewhere, but will try to keep this a bit shorter...
I am, as most here know, primarily a Karaoke Host ( never refer to myself as a 'KJ"). I only DJ for the money, but truly love hosting karaoke. That being said:
First, without doing the "look what I spent to the penny" bit, I can truly say that the cost and quality of my equipment is equal to what any good DJ would have. I have 3 separate setups, and what I use for DJing is completely different than for karaoke.
Now, what may seem cheaper to you may well be BETTER for the job at hand. My favorite example is the microphone. Sennheiser makes wonderful vocal microphones. Clear, crisp sound. Expensive, but worth it- and I would rather die than use one for karaoke. A top pro mic like the Senn is very unforgiving, and picks up every flaw, keychange, and impediment of a non-pro singer's voice, and let's face it, karaoke is for fun, most of these singers aren't on the verge of signing recording contracts. So I use Shure SM-58s and even 48s. They ARE pro quality, yet they are much more forgiving, making my singers sound BETTER than the more expensive Senns. Less expensive, better equipment.
Let's talk about amps: My larger DJ setup can do 3,000 watts, but do you really want 3,000 watts of off-key singing at an average sized bar? My medium amp runs 1800 watts, but for average sized and small bars I only use a 750 watt amp, and rarely go even half volume- and it does a terrific job. In other words, it's BETTER yet cheaper than my 3000 watter.
One other thing. I CAN do quality DJ work with my karaoke setup, but quality karaoke can't be done with a straight DJ setup, though many try. Two-way DJ speakers can't produce the vocal sound that 3-way karaoke speakers can, and remember- with karaoke the vocal midrange is the star.
A DJ mixer doesn't offer the versatility and effects required for karaoke. There's a lot more, but you get the idea.
In other words, in many cases, DJ equipment may cost more for less.
Another bit of pricing info: I am an EE and I also am a distributor of high end electronic components ( resistors, caps, chips, diodes, etcetera ) used in the audio, areospace, and medical industries. Whatever you are PAYING, the electronic quality of components and design between karaoke and DJ equipment is comparable (bells and whistles aside). If a company uses quality components it produces a quality product. There is no delineation between karaoke and DJ ( some one and the same manufacturer.) equipment. I know because I sell to both types.
The "karaoke uses cheaper equipment" statement is a myth. Some DJs use cheap equipment, some don't. Some KJs use cheap equipment, Karaoke Hosts....well, Karaoke Hosts don't
