Ridiculously expensive. The cost of hosting a mom-and-pop website is close to zero, and they charge $20/month or something like that.
Except Squarespace does not just sell hosting. Their main business is selling a CMS and website builder that is supposed to be easy enough for complete noobs to use.
You and I know how to build and host websites, ok, but it had likely taken us dozens if not hundreds of hours of learning everything between TCP/IP to ARIA attributes to get here. The average small business owner does not have this knowledge or the time to learn it. They keep Squarespace in business.
You're not paying for the hosting, not why would they try to sell you that, really? People pay them for everything else around the hosting.
It's not ridiculously expensive. It's ridiculously cheap. $20 per month is nothing for a small business to spend on something that solves a problem.