Actually it is about the cost. It's very much about the cost. Because who says what the cost is?
As far as "the guys constantly feeling wronged" bit I'm not sure what that has to do with anything. I can count on one hand the number of times service was subpar, maybe 2 times I felt "wronged" in many many encounters over the years. The ugly/poor hygiene/whatever tax you're mentioning to justify overpaying wasn't even a factor in my mind.
When a mechanic tells me it's going to be a $400 fix I don't tend to to give him an extra $50 because I like the way he moves his hands while doing his job. If he feels he has better skills or offers more than the next mechanic he'll adjust his rate to reflect that, not hope the customer notices and appreciates it enough to give him extra. And if you're a mechanic working on cars charging $90 an hour for labor but enough people keep insisting on giving you $125 an hour aren't you at some point going to get the idea that you've been undercharging and should just charge the $125? Market drives the price.