You only pay $100, but you're required to have much more cash on hand to hire (not sure exactly what the number is; might be the disband cost, not sure) and this number scales with merc size. Since that's the amount of money you need to hire them (even if you don't actually spend that amount upfront) it's what limits your ability to hire mercs. So really the ability to hire mercs does scale and $100 is just a floor (even if it's a rather convoluted floor/scaling).
Actually it has been changed. Upkeep is relatively cheaper.
It's about $0.38 a unit a month. And no other spendings. But you always have to pay $100 upfront.
In the past, you'd need $21 (coded requirement) to hire a Band with 4 Units, with $2.1 upkeep. But you pay $100 (actual requirement) upfront and $21 to disband.
Now, the same band costs $100 to hire with around $1.6 upkeep with no other costs.
Yes it's cheaper. But the problem is it doesn't scale. And AI usually just has a lot of cash sitting in their treasury. So they are very willing to spend the $100 to hire them.
So if they're attacked, they spend the money and win a war. And after that, they run out of their treasury and become a sitting duck for a 2nd invasion by another country, as they would disband quite quickly.
Things would be improved by a whole lot if the upstart is not hardcoded, but scaled to somewhat reflect the surroundings.