While I agree that Mercs need to be toned down, you can't lower them too much. If you do, then it defeats the purpose of having Mercs. And if you increase their cost, then you're further diminishing their design.
Ways To Balance Mercs:
1) Restrict them from benefiting from Armory upgrades
I'm not sure whether or not Mercs benefit from the Copper/Bronze/Iron upgrades or not so that is simply speculation. But if they do, that needs to be axed right away.
2) Have them increase HP/ATK/Hack and Pierce Resist by age but balance them out according to the units of that age.
The Egyptian Priest is a lot like this. That unit is very weak in Archaic but grows in power as each age passes. The Merc should act the same way. These units really only need to be strong enough to defeat the units of that age. If I'm in Classical and you rush me, my Mercs should be able to defeat your Classical rush by more than a 50/50 chance. But they should fall more easily if I'm still in Classical and you're in Heroic (and fully upgraded).
3) Restrict their movement to 35 paces, if not shorter, from the town center.
If I'm not mistaken, I think the longest ranged unit in game is the Ballista at 32 paces (base range of 30 with the +2 range from the Engineers tech). By keeping their radius short, you prevent players from just pounding out gold mines and spamming caravans to up their gold so that they can defeat their opponents via Merc rushes.
The simple fact is that Mercs were given by the Egyptians because, overall, they have a weaker military than the other two civilizations. Even their myth units are weaker (with the exception of the Pheonix). With equal techs, not including myth techs, a balanced 60 on 60 battle between the Egyptians and the Greeks/Norse would equal a defeated Egyptian army. Its inevitable. So they had to be given something to keep the Greeks/Norse from just steamrolling into Egyptian town centers. But the problem is that, as always, players find loop holes in the systems that creators make because we push the envelope. We think of everything, and then some, that they developers didn't. Unfortunately, in this case, the players are exploiting the loop hole and it needs to be fixed.