Why is ipod repair pricing so outragously expensive?

Hi all,
My 3rd gen 40gb ipod has failed recently after barely 2 years of usage. I am pretty sure it's the hard drive that is failing. I can clearly hear weird noises it makes. I can't even access it at all anywhere, like on windows explorer or itunes 7.01. I just get a ton of different errors everywhere. I tried absolutely everything from restoring to factory settings to trying like 10 different itunes alternatives or trying on a fresh computer reinstalling everything... It's hopeless.
So anyway i researched and found out i had to pay 300$ and 10$ shipping canadian (i'm from quebec) to get my 3rd ipod repaired (replaced). http://www.apple.com/ca/support/ipod/service/prices/
How can this make any sense? How can it be logical? Justify such a high price. I can get a freakin 30gb 5th gen new video ipod for less from any popular place like tigerdirect.com or futureshop.com ....
All i need is the hdd replaced. It's like a 40gb latop hdd. So it shouldn't cost more than 100$ no!?
I don't understand... Why is ipod repair pricing so outragously expensive?
Thanks for any replies,

try www.ipodresq.com or
www.ipodmods.com
pricing should be more more logical there.

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