So Shaidar points out that - without and OS load - a PC shop charges $144. Assume the OS load costs about the same as the hard disk install (it's more of a PITA) so that's about $200.
Wow. Apple is really screwing him!!!
Seriously, if you take a laptop of any variety in for store bought service it's going to cost a lot. Apple is completely in line with market prices.
A couple exceptions.
1) I sell new drives with 3/5 year warranties (Hitachi and Seagate)
2) You get your old drive back
Apple kept this guy's old drive, and sold him a refurb (with 90 day warranty, probably).