My last kid’s bday party: about $40 in Walmart for water sprinklers and a slide. Plus the food for 15 kids and their parents (all family) which we normally do once a month or so anyways. He got about $300 worth of presents from the guests. Not a bad deal 
I don’t really see why, if you have a pretty good kid and you have the money, it’s such a big deal to throw him/her a big party. I mean, come on - if not in childhood then when? Isn’t that the time we’re allowed to have people make much of our birthdays?
I mostly had fairly small parties, no more than 5-10 people. However I was a mostly good kid, and had a lovely Sweet Sixteen - about 150 guests. However they came for the fun. We had great eats and lots of dancing. And they were kids & adults. I would have loved to have a “kids-only” expensive party, like a trip somewhere, but my parents would never have let me go anywhere without them, except maybe Gita camp. 
I think as LilyoftheValley says, as long as they are already learnign responsibility and charity it’s a wonderful thing to do.
This past year both kids got “big” parties outside our home. My son turned 7 and had a karate party, ~$150, my daughter turned 5 and had a Chuck E Cheese party, ~$200. We’ll never do Chuck E Cheese again, it was too much everything. The kids have been talking about where they want to go next year, but my wife and I decided that, even if we could easily afford it, we wouldn’t have big parties for a few years, if ever. We’ve had parties at the house with a bunch of people and kids, those are a lot of work but are also a lot of fun. And that’s what we tell the kids.
A co-worker, who is Indian, had a party for his daughter’s first birthday. There was easily 100 people there, and I know it cost more than $1k. And his daughter cried almost throughout the entire party. But first birthdays are a big deal in his culture so that’s what you gotta do.