Sounds extreme to me, but hey if you're willing to pay then everyone's happy. Even for the most time consuming and intricate job we charge less than R3,000 for labour. Each to his own.
Recovery companies will often give you a vague report such as "electro-mechanical failure" which could mean a million things. You could request they provide you with a conclusive report indicating the exact fault, perhaps they would charge extra for this.
'Physical damage to the drive' could be a damaged PCB, seized motor spindle, faulty head/s, scratched platter, numerous things. Perhaps request a full diagnosis from the company you took it to. You can sometimes hear if there is damage to the platter/s. If you only hear clicking then the platter/s are usually OK. With a bad scratch you can often hear some form of scraping, screeching etc. Not always, but a lot of the time. I'd say get a proper diagnosis first (even if it means you pay for it) and then you can shop around for a better quote.