I think a lot of it depends on what you get.
I used to think the Dive Resorts in the Caribbean charged way to much for certification. They wanted $350 to $400 easily for certification.
In the area I live in. You can get Basic Open Water (BOW) for anywhere from $180 to $300+. But what you get all depends also on the price.
For $180, that's the class only and not the $45 worth of books, but they sell it with the books also (total price is $235). Most of the dive shops here do something similar, but just different pricing. (all include equipment and air fills for the class)
What is not included is the check out dives. That's because some people decide to go on long weekend Florida trips for $300-$500 or Caribbean trips for more. Others decide to go to the local quarry for $18 bucks a day for checkout dives.
But the Caribbean dive resorts charging the equivalent of $350 or more that seemed high to me makes sense if you do a little math. Lets say that a 2 tank boat dive costs about $65 or $75. Doing 4 or 5 dives for certification checkout easily make up the difference between the local price of $250(+/-) and the resort price of $350-$400.
So it's all in what you get for the price that is part of the issue of costs and what you should pay for instruction.
As for instructors charging more, I don't think that'll happen much. Most instructors are associated with dive shops, who set the price. They often keep the course price low to attract customers or beat competitors prices. They hope to make this back in initial and repeat gear sales on this new customer.
I personally don't see how they make any money on classes anyway. At $230 to $250 per class, for having to take 4 days over 4 different weekends. If they taught 5 students at $250 each that'd be $1,250 for the class. It would take the instructor typically 4 days of his time. Then there are fees to the dive association (padi, naui, etc), insurance, shop overhead, equipment (for students, instructor, etc), air fills, transporation, wear and tear on all of the above, etc. Heck, I'd say they are loosing money almost.....
my 2 cents worth.
-mike