Essentially; purple dye was both expensive and difficult to make. You may have heard before of the association between the colour purple and Royalty, or Roman Emperors - this is for the exact same reason.
Originally, the only source of true purple dye was from the Phoenician - then Canaanite - city of Tyre, known as Tyrian purple. The first reference to the dye can be found in one of the Amarna Letters, dated around 1350-1334 BCE. The dye itself was extracted from various sea-snails of the Muricidae family, specifically Murex trunculus, Purpura lapillus, Helix ianthina, and Murex brandaris, all of which were only found around Phoenicia. Though many sources state where the dye comes from, the actual process of removing it isn't written down until 1500 years later, by Pliny the Elder, who writes:
"The vein...is then extracted and about a sextarius [ca. 7 lb.] of salt added to each hundred pounds of material. It should be soaked for three days, for the fresher the extract, the more powerful the dye, then boiled in a leaden vessel. Next, five hundred pounds of dye-stuff, diluted with an amphora [about 8 gallons] of water, are subject to an even and moderate heat by placing the vessels in a flue communicating with a distant furnace.
Meanwhile, the flesh which necessarily adheres to the veins is skimmed off and a test is made about the tenth day by steeping a well-washed fleece in the liquefied content of one of the vessels. The liquid is then heated till the colour answers to expectations.
...
The wool drinks in the dye for five hours and after carding is dipped again and again until all the colour is absorbed." source
So, as you can see, not only did it take at least thirteen days to make, with constant heating, it also needed a large amount of salt, which was also very expensive. The historian Beatrice Caseau stated that it took, "10,000 shellfish would produce 1 gram of dyestuff, and that would only dye the hem of a garment in a deep colour." source
The production of Tyrian purple ceased entirely in 1453 AD with the fall of Constantinople, and eventually, in 1464, Pope Paul II ordered his cardinals to change their vestment colours to red instead.
There were alternatives to Tyrian purple, which had been used during the production and continued afterwards, but they were also expensive, time consuming, and incredibly difficult. The main technique was to dye the cloth blue (e.g. woad), and then re-dye it red (either kermes or madder). Depending on which dyes were used, the results were often muddy and undesirable.
One of the only other alternatives was lichen dye, with the Umbilicaria genus, and the Evernia prunastri species both making fairly rich purple dyes. However, lichen dyes were prone to fading more quickly, and were considered not quite as rich or bright in colour as Tyrian purple.
In 1856, everything changes. An eighteen-year-old chemist called William Henry Perkin was trying to synthesise quinine, an anti-malaria drug that at the time was only found on the bark of the cinchona tree in Southeast Asia. While he did fail to manufacture quinine, he did develop aniline purple, the first synthetic dye, that he found could give a rich and lasting purple colour to silk. He patented it, bought a factory, and begun to produce it. It soon became known as "mauve". This started a fashion trend and a craze for purple clothing. It was worn by the French Empress Eugénieit, became one of Queen Victoria’s favourite colours, and was used on British stamps from 1881–1901. It proved so steadfast that some of the earliest samples are still strong colours today.
In conclusion, and in reference to your original question, there are three main reasons why purple may not be used on many flags:
Of course, nowadays, more modern flags, such as those for the LGBT+ community, frequently use purple, as it is quite as cheap as any other colour dye.
Sources:
https://www.penn.museum/sites/biomoleculararchaeology/wp-content/uploads/2010/04/archeomat1.pdf
http://www.ancient.eu/Tyrian_Purple/
http://www.smithsonianmag.com/smart-news/in-ancient-rome-purple-dye-was-made-from-snails-1239931/
https://www.penn.museum/sites/biomoleculararchaeology/?page_id=80