Yikes! I honestly couldn't guess the going rate nowadays but that does seem high. 1000 labor is nuts. Back in the day I could do a common gear swap in 4 hrs tops. Unless they are charging 200 bucks per hr that seems too high.
I just bought parts for mine; Revolution gears and install kits with Koyo bearings was 407 shipped; Dana 35 Truetrac and Dana 30 Aussie locker were 670 shipped. That is just straight cost, no discounts other than free shipping on the locker/TT.
Hell, maybe I should start doing some installs on the side, 500 labor would be a bargain