You wouldn't need five times as much prosperity because 25 eats more S&D than it does with 5. So while increasing prosperity by 2 would give a 25 fief only 1 additional transaction per day, it would give a 5 fief 4 additional transactions.
True, I wasn't factoring this in. That being said... it's yet another calculation that my proposed system would eradicate. So perhaps the magnitude of the problem of high-costs being superior to low-costs is more accurate taking that in context, but as you say...
However, two fiefs with the same S&D the one with the higher goods price will end up making more money.
If everyone had high-priced fiefs though, there would be less goods being moved. Meaning less money for traders. The biggest bonus is coming from owning the low-priced village yourself. Then you can buy up all the trade goods for cheap, and prevent other people from doing so. Since you can't sell all of those trade goods at one spot, you will have to move between cities, or put them up for sale in the city itself for a better price and hope someone else comes along and buys them to continue moving around.
Is anybody needing to do this? I manage the NA trade routes. I've never needed to use Town Centre/Hall. Doing so needlessly complicates the problem I keep facing- plenty of goods, nowhere good to sell them. Based upon the existing system, you'd think it would work the other way around.
In sum, yes, there is some balance on the problem by the increased use of S&D thus limiting the number of high-cost transactions. This is also frustratingly and unnecessarily complicated. Taxing 1, 2, 3, ... gold per S&D
and removing that increasing S&D cost makes both high- and low-cost fiefs equally lucrative and vastly simplifies a system where the developers have, seemingly arbitrarily, complicated a very simple concept with weird limitations (a la PP's a day, tax change limitations, prosperity limitations, so on and so forth).
If you like the nonsensical system that exists, I won't change your mind, no worries. If you want a system that makes a hell of a lot more sense, this is an easy way to do it. No more fluctuations in how much S&D is used when trading 1 good, no more disparity between fief profitability based upon development towards selling or buying, no more getting taxed .0247 gold and other ridiculous numbers.