Do I need an expensive microphone?

Let me get it out of the way - I will always suggest the AT2020 USB. It is more expensive than a comparable microphone from Blue, but I never really liked how the Blue Yeti in particular sounded. Both microphones seem really expensive at over $100 (Yeti seems to have dropped to sub-100 used), but that's because they include an audio interface inside of the body of the microphone.

I didn't know what audio interfaces were, at all, for probably my entire career making an UTAU. An audio interface will allow you to get a higher quality microphone for less money (AT2020 USB goes for $149, but XLR goes for $99 according to Amazon), but the audio interface (especially with phantom power) will likely cost more than just getting a really nice USB microphone.

If you really, really want to spend money on a microphone, ask yourself what you will use it for. If your only answer is UTAU, I would cap spending at under $200 USD and go with an AT2020 USB. People do buy thousand dollar microphones for UTAU. (Of course, used and from eBay so it's closer to $600.) If you have the money, and you can see yourself using it for singing, streaming, or podcasting, then go for it! But please never feel like you need to spend anything for this hobby.

inb4 mae wants to drag us all down to her level - remember that there are different economic levels. You may be able to afford a lot of audio equipment, but not everyone can. This article is to help people who can't afford that audio equipment be happy with what they can get. 

Do I need an expensive microphone? 

When people in the fandom want to insult you, one of the first jabs is microphone quality. It doesn't even have to be true - they just go there. That can make you feel like you will never get anywhere in the fandom without paying big money. That isn't true!

Below, I'm plopping down a comparison between three banks recorded with three different microphones. I made choices I'm not exactly proud of that keep the comparisons from being one to one exactly, but they're close enough. 

Which sample do you like best? Which feels the most clear?

To me, it's the second sample. The first sample is a little tinny and in some places abrasive to the ears. The third is muffled (and is recorded at C#3, but that's irrelevant here).

The second sample is clear. It has some issues with sibilants, but that can be edited out using equalizers.

Knowing that, how much do you think each microphone cost?

For the first two, it's a big, whooping zero (additional) cents. The first microphone was my laptop's embedded microphone - the same one I use for all of my "let's play" videos on YouTube. The second microphone is my phone's microphone. The third... I tried out someone's setup and I have no idea how much it cost. But, I believe their audio interface alone might have cost more than my phone, which also plays Stardew Valley and calls my mom.

If you look at this like an audio engineer, the stupidly expensive microphone is better and sounds the closest to real life, of course. But, there's two important notes here. The first is that the fandom tends to celebrate bright vocals compared to darker vocals. The phone microphone UTAU would likely be more popular than the expensive microphone UTAU due to that. The next point is just that the difference in quality is not worth the money to me. It's not night and day - it's just slightly better. This isn't even comparing it to the AT2020 USB, which likely costs only as much as the audio interface itself. (My stand broke, so the best I can do is give you a sample from my UTAU's last bank. The AT2020 bank definitely would be more popular than the expensive microphone's bank due to tone.)

How can I make my current microphone better?

There are two main things that will affect your recording quality: frequency response and background noise. Other than using equalization after the fact, the only thing that will change frequency response is changing the microphone itself. Background noise is a lot easier to deal with. Here's a quick list of ways to help with it for free:

1. Turn the volume/sensitivity of your microphone down in volume settings if possible. You'll need to be a bit louder, but it will stop it from picking up a lot of background noise.
2. Turn off all fans and heaters.
3. Don't put your microphone on the same surface as your computer without some kind of buffer, like a pillow. (Your mileage may very - people told me this, but all I really noticed was my microphone falling on my face.)
4. Try using a blanket as a makeshift sound booth. (Never worked for me, but I only tried using OREMO, meaning my computer was under the blanket with me... Getting hotter and making the fan run harder... I was a dumb kid.) 
5. If possible, hide in a closet. If there aren't enough clothes to buffer sound, put up quilts or blankets.
6. Record as far away from your computer as possible.

I did all that and it's still noisy!

If you tried to get rid of noise as best you could, but your samples are still noisy, try making a whisper bank or a soft bank. That layer of noise actually improves a whisper bank by allowing it to stay nice and whispery as opposed to getting normalized to being quite loud by the resampler / wavtool.

However, don't feel like you have to do that. You can make a strong kire bank with your muffled samples. You can experiment with noise removal (ReaFIR is bae).

UTAU isn't a contest. You can make amazing things without paying a single cent (assuming you have a phone or an embedded microphone on your computer). Don't let people bring you down just because of microphone quality!