You are conflating two things with that story. The prototypes cost $20,000. The designed can cost $3,000. Higher than your "$1,000" can, but it also had a bunch of "features". If you've ever worked at a hardware company, you probably know that the price of DVT units, or any prototype, ends up being significantly higher than the production unit.
So you're saying the designed can cost 3X the COTS one. Similar idea to the story, no?
https://sfpublicworks.org/trashcanredesign
TL;DR: San Francisco government decided to go with custom-designed, bespoke, artisanal public trash cans. Each can ended up coming in at around $20K.
When, in fact, if you buy a typical run-of-the-mill public trash can that most other cities do, it would cost them less than $1000.