What the hell is going on with shops?

It sounds as if the guy went in and asked what a specific repair would cost. If he were to ask you for the same, would you automatically include diagnostics, or would you offer the diagnostics as an option? And if declined, do what the customer asked of you. Minus your warrantee of course, I wouldn't offer a warrantee on the job if it was based off of someone elses diagnostics.I've taken a vehicle in for a blown exhaust donut before. told them it was leaking, and when I went to pick it up they said they couldnt hear anything and here's our bill for checking. Didnt even replace the damned donut and STILL wanted 85 bucks.

This is exactly the case. ^
We have, and know how to use the Snap on diagnostic computer and the code said it was the OD lockup solinoid failure.
Trans is a 46RE and the solinoid is accesible with the pan off.
We found the solinoid (aftermarket unit) $60 and he asked the shop what it would cost to drop the pan and put the customer supplied solinoid in.

So basically it is a trans service and swap out the solinoid while the pan is off.
No diagnosis needed, and of course no warantee expected for the part or if the part didn't fix the problem.