At $2,000 they make a profit. At $1,200 they make a profit, and at $400 they make a profit. We can buy one condenser on eBay for $70. Image how cheap they get them for when they buy a few million at a time. Lets say their cost is $50 for the condenser. The replacement condenser might even be free for the dealer if they have a defect guarantee through their supplier. Anyway, lets say they pay $50 for the condenser. If they are not busy, then the labor costs the dealer nothing, because the mechanics are sitting around drinking coffee on the clock anyway. Even if they are very busy and the repair cuts into their other repairs, it takes at most an hour to swap it out and recharge the system. They pay the mechanic at most .... what..... $50 an hour? So they are into it $100, and they charge you $400 - its a $300 profit margin.
I'm not saying that you got a bad deal. All I'm saying is that neither did the dealer.
I worked for a manufacturing company at one time, and they sold their product for $2,000, with a lifetime warranty on the electric motor. The electric motor itself had a retail price of $750, but under warranty you could get it replaced for only a $100 deductible. The motors cost the company $11 each when they bought them in bulk. It didn't take long for the company to figure out that if they put even lower quality motors in the product, that they would make even more money. The cost was lower, plus they would replace twice as many motors under warranty. Every warranty repair they did would result in an $89 profit. Who did they have replace the motors? The guy that builds the product. He would sit there and build the products, and when a warranty repair came in, he would fix it and then go back to building more of the crappy products. No extra cost on labor at all, because he was already on the clock and had a huge stockpile of products that he had already built.
Dealers make money in one of two ways:
1) Sell the trade-ins with a huge profit margin.
2) Service and repair cars with a huge profit margin.
A dealer's least profitable transaction is selling a brand new car to an experienced buyer with no trade in.
P.S.
Not looking to start a big debate over dealership profitability.