Why do you need to undergo KYC in the first place? if your not buying their tokens in their ICO then KYC is not required, For investors point of view, i will probably wont touch any project that is asking for payment to complete my KYC. Imagine if 10,000 people play in this project that would be an easy 20k USD for the team

If they have to do KYC verification process, it wont come for free. They have to pay for this service or for the person who does this verification.
Agree. KYC does cost money for every project. And whatever money project will be receiving will be used for project development. If they start spending money on KYC then it will affect project work as well.