Our first customer complaint. Did I screw up?

Nut farm
I recently quoted a job for a 2004 Honda CR-V. The compressor clutch and bearing was literally grinding itself to a pulp, reeked of metal to metal/burnt clutch smell, and was literally throwing sparks. Worst one I've ever seen. I called all of my part connections and got the best prices. I gave him an initial quote of $1,000 to replace the compressor, condenser, and flush the system, but I said it may increase if we find other issues along the way. The customer said no problem, we just need the car operational (it had been sitting in this condition for a few months). So we got the parts and began. Our labor charge is $80/hour. Long story short, the entire system was contaminated, and it was the worst possible case scenario. We replaced the compressor with a remanufactured one (per the customer's request, which upon opening the box included a message that stated "due to a core shortage, this remanufactured compressor is actually a NEW unit"). We replaced the condenser, expansion valve (which we found out the hard way had to be removed via the dash), the evaporator core since it was already out to access the expansion valve, flushed the remainder of the lines, replaced literally every o-ring, recharged with PAG 46 and R134a, replaced the cabin filter since it was the original at 140K (no explanation needed, it was disgusting), and did a full synthetic oil change for $20. Basically the whole front end had to come off to get to everything, and the entire passenger side of the dash came out for the evaporator core and expansion valve.

I called the customer every step of the way with progress reports and any hiccups. I always call before incurring any charges. I did have to call to add an hour of labor for the dash, and gave them choice to flush or replace the evaporator core. They chose replace. I also called to ask what they wanted to do about their engine oil (since I am a member here after all). It was dark and over a quart low. I gave the option to leave it, top it off, or change it. They chose to change it. Those were the only issues.

Once everything was put back together, everything was great. You could hang meat in that car. But then we realized the condenser fan was spinning, alone. No radiator fan. We swapped relays, checked fuses, did everything we could to avoid replacement. Nope. When you gently tap the fan motor with a wrench it begins to spin on it's own. Once they both cycle off, the radiator fan never comes back on without being tapped again. Obvious motor issue. This vehicle has separate radiator and condenser fans, so it only needs the single fan and I could get it for $100, cheaper if the customer waited for one to ship. I called the customer stating we did run into one last issue with the fan. They immediately got irate. "We can't do it!" This was supposed to be a $500 job and now it's over $1,300!" I tried to calm the situation and explained that "this is potentially an issue that contributed to the original system's failure, and this is not something you can go without. If cost is an issue, I'll gladly do it free of charge to help you out and prevent issues later on. I just need a little extra time to acquire the part and install it. I won't charge labor for it either. I just don't want you upset down the road when the new system you just installed breaks over a $100 part." They insisted we do it free, and asked when to expect the vehicle. I told them later in the day after my partner, the mechanic, gets off from his day job (for clarity, we do this on the side and make that clear to every customer before we do any work. I'm the parts guy and accountant, he's the wrenches. I also turn wrenches on the simple stuff, but he does the real work).

Our total for the ticket including all parts and labor would have been $1,160.00, which is only $60 over the original quote before adding the approved oil change and evaporator core. Those increased it $100 to $1160. The fan would have made it $1320.00, but I'm eating that, so $1160 it is.

Call me naïve, but I never imagined a customer being upset at a quality job, with a warranty we stand behind, for peanuts. Especially when there was no deadline to meet, I always hold myself to the ultimate standards of professionalism and etiquette (yes ma'am, yes sir), and never add any surprise charges (they get a call if I have to add $2.50 for a can of brake cleaner).

Part of me wants to hold firm at the $1160, part of me wants to try to make peace with the customer and reduce the parts to our cost (I can't reduce his labor charge, that's not fair to him. Besides, the labor total was only $500).

I understand the customer's point of view, it's a big expense and I called them three times with add-ons. But my point of view is they were all necessary items, gave them choice of how to navigate the issue, and they approved everything until the fan. Ultimately, I was so bothered by the situation that I reached out for three quotes from other local shops. The cheapest came back at $2100, and that was missing some items that we did. Another shop that itemized everything identically to us quoted $3,574.77. I don't feel we've done them wrong, but I'm curious to hear your opinions in both sets of shoes.
Honda's infamous "black death", very common on CRVs and frequently totals the vehicle. Guy I worked with had that, I recall a dealer quoted him over $4000 for the repair. Twice what you charged would be reasonable.