Just food for thought:
According to repairpal.com Check engine light diagnosis for zip code 92109 is $90.00 - $115.00. (This should be the average charge in this area)
I do not support repairpal but it can be used for price shopping.
There is nothing wrong with using any service as a loss leader (properly done this can be effective) and I agree that diagnostic testing has become what I call menu priced.
We have to be competative on common service items such as LOF, alignment, brakes, fluid flushes, tire rotation, tire balance and now our initial diagnostic testing. We don't have to be the cheapest but we must be in the ballpark of most others offering these services or we may be precieved as too high. If we are too high on these menu items we may never get the chance to turn some people into customers. The thing to remember is we need to make a reasonable profit so we may have to adjust rates accordingly on other items to ofset our menu prices.
Pricing is an important part of business and most auto repair shops don't spend enough time planning thier pricing strategy.