Watkins was on the radar, with the club linked with the former Exeter City youngster in late 2018, as he began to impress after a £1.8m move to Brentford.
He netted 23 in 93 appearances in his first two seasons with the Bees, but a reported £20m price tag proved prohibitive in the summer of 2019, with the Clarets instead sealing a return for Jay Rodriguez.
Watkins’ value rocketed last season with 26 in 50 games as Brentford reached the Championship play-off final.
His former Brentford boss Dean Smith was happy to pay £28m rising to £33m for the player, who has started life in the Premier League well, netting eight in 13 appearances in all competitions, including a hat-trick against defending champions Liverpool.
Dyche said: “Ollie Watkins is certainly one they’ve brought in for a lot of money, and done well, I think.
“A player we’ve looked at, but the numbers keep rising and rising and rising, and Villa have got those numbers.”
Burnley have often dipped into the Championship for value, and either had or signed the top scorer in that division for three-successive seasons, with Andre Gray, Chris Wood and Matej Vydra.
But Watkins' fee shows that avenue has become a pricy one: "For a player who has done very, very well outside the Premier League to move for that amount of money is a big fee.
"Villa obviously decided they were going to pay it so it is simple.
"It is not actually rocket science, it is just you need a chairman and a board who will spend that money. If you haven't got that then it doesn't get spent so it is simple.
"Most clubs know the runners and riders, know the players who are going well, have done consistently well over time, the possibles, it is putting the money up to get those players and that is something I have mentioned many times about this club beginning to stretch itself and learn that the market doesn't care whether we want to spend or not, it is saying 'you've got to.' So it is a simple equation."
Ahead of Thursday evening’s game at Villa Park, Dyche feels Villa have found an impressive balance since Project Restart, as they avoided the drop before starting this season strongly: “The players in an attacking sense have a number of different ways of operating, often with the floating wide players and a centre forward, whoever that may be.
“It’s not just about their attacking prowess, I think they’ve found a format that suits them better, that balance we all look for in management, attack one end and defend the other.
“They’ve found a way of working that is so far suiting them, our job is to find a way that stops them from operating as clearly as they want, and find a way of making the game as much about us and uncomfortable for them, so we can go and take on the game.”