Minimal ranting, maximum analysis -- I like it. Here are my two cents:
Local business: I seem to be in the slight majority in that I'll support my LDS by paying a bit more than shopping online. In return, I get info through conversation that I couldn't get online. Incidentally, I'm able to visit ScubaToys in person, and I can tell you that their brick-and-mortar operation delivers that same level of personal experience, such as passing on other customers' feedback. Another LDS was kind enough to advise me of local conditions when I inquired about diving a new-to-me site. They also advised me about safety gear, and I followed their suggestions in making my purchase on the spot. I didn't bother to take their suggestions and research prices online.
Satisfaction: However, I seem to be in the minority because of the four LDS's I've patronized, in two cities, three of them gave me good service and reasonable prices. In the shop through which I certified, and bought my entire first kit, the owner never upsold me. In fact, I asked him for a comparison of the "Chevrolet" and "Cadillac" lines (he liked my phrasing), which he knowledgeably and fairly provided. I ended up buying "Pontiac" in most cases, which was a win-win for us both.
Classes: Training materials do cost much more than a ream of copy paper and toner, and/or a bundle of blank DVDs, as Damselfish pointed out. (I'm in the technical training profession.) You get what you pay for: I took my AOW course at a discount arranged by a local scuba club. That shop provided a contract, non-staff instructor who seized the opportunity to relay war stories. Then they double-credited a single dive as being both a deep dive (at 60' plus one inch) and a boat dive. Not coincidentally, that shop is the only one of the four in my experience with whom I won't deal again. Their selection is limited, and their clerks seem to be competing in a "Funniest Comedian" contest.
Role of dive clubs: I'm surprised that nobody has mentioned local organizations. One local dive club is affiliated with a particular dive shop. While that arrangement has the potential to just market the shop, the club officers do a good job of balancing and even controlling the shop owner's input. The shop has more-or-less guaranteed business. The club members have a reliable source that's under constant, direct, peer review. That's a win-win situation. Here's an idea that perhaps a club might use: survey club members yearly and pick a shop to support, based on ongoing feedback. Make awards and recognize that shop, and inspire other shops to compete with service.
Air fills: I like the idea of a co-op arrangement. Does anybody have direct experience with this? Are there any dive clubs that are doing this?
Thanks for letting me participate in this good discussion!
--Wayne