I do not have the market rates for vulnerabilities, but I do know some pen testing companies charge $10,000 for a few days of work that may not return any concrete bugs.
Compared with hiring a pen testing team, offering high bounties seems like a bargain as you get actual exploits that would impact the company.
Yes, that is the premise behind bug bounties. If you're a vulnerability researcher with a track record, you will probably make better money and certainly more consistent money as a pentester. Many pentesters just do both.
XSS? Outside of a social network, where it can propagate itself? For a non-FAANG-scale company? Probably between $250 and $500, if it's a clean and effective XSS. Less if you have to interact with an obscure feature of the application.