I don't know how Moto and other cell phone manufacturers' models work but a basic retail model is based on a 40/10 discount basis. So, based on a stated retail price of $100, the retailer gets a discount of 40%, then a stacked 10% discount. So the wholesaler sells the $100 item to the retailer at a price of $54. The retailer then marks up the item to a price that yields them a reasonable profit margin based on their individual business. So the manufacturer is likely selling their product to the wholesaler at a price a bit under that $54 price so the wholesaler gets a profit. So a product's markup is exponential compared to it's actual manufacturing price.
With smartphones, it seems there is no wholesaler, so it's a direct manufacturer-to-retailer relationship. And if we apply the 40/10 discount model to this relationship, a $699 retail priced smartphone's price paid by a carrier to the manufacturer would be $378. So if Moto were selling their base $699 model to a carrier for $378, they can sell it direct at $399 and make a higher margin per unit. So the price totally makes sense to me.
The main question is whether or not they move the equivalent volume of units in order to make a cumulative profit from their efforts. That being said, I have also seen some comments that indicate the Pure Edition/Style version is a "loss leader" for the company to get their true profit-maker, the Moto G, more press as part of the Moto family since it is their best-selling model.