I'd spend what my budget allowed. Or sometimes a little bit more.
In all seriousness, it depends on the purpose of the piece and your other fashion expenses. If this is a HEWI for you (a hard to find, elusive wardrobe item) and you absolutely NEED it to complete 3 or 4 outfits to your satisfaction, well, I would look around, but I'd also be willing to spend on it. It might turn out to be the backbone of your wardrobe!
On the other hand, if it is something that would just be "nice to have" then maybe you don't need to spend so much.
I agree that all cotton won't be a good bet for reasons of fading. Unless you pay a low price and can pick up a couple and cycle through them.