Excessively expensive, exorbitant. The first phrase is American in origin and dates from the mid-twentieth century. The source is obvious: giving up an arm and a leg to buy something is clearly too costly. The use of “pretty” to mean considerable in amount was originally British and is now archaic except in a few well-worn phrases like this one, a cliché since the late nineteenth century. It was common throughout the eighteenth century, and crossed the Atlantic as well (“The captain might still make a pretty penny,” Bret Harte, Maruja, 1885). A similar term was a fine penny, now obsolete.