A lot of people are saying you are getting scammed, but when I got quotes last year, they were upwards around $7,000. That's when I decided to do it myself. The water heater was $1200. It took me a day, but I don't make $6,000 a day on my best day. 

It sounds like you are paying for a new water heater and parts and they are providing the labor for free, even though they may be telling you that you are paying for the labor.

Notice the absence of responses from any actual plumbers.