The game's economy in general makes no sense, but I think 500 gold for, let's say the merc might assume a couple of weeks' work is actually one of the more reasonable prices (although the fact that you can get them to work for you forever for that 500 is a bit daft). I'd love a mod that let me either pay my followers a salary *or* give them gifts (either money, valuables or equipment) which would go into their personal inventory (allowing equipment to be, er, equipped) which I couldn't access (i.e. where the game keeps the follower's default gear that, unmodded, you can't take from them). I'd really like to be able to give my follower(s) a couple of hundred gold and leave them in an inn for the night, and not be able to take the money back later.
As it is, I tend to give them nice gear that I won't be using myself, and given I rarely loot everything I can possibly carry after the first couple of weeks, I work on the assumption that they're also sifting through the chests and so on, and taking whatever they think looks good.