When I was referring to contractors ripping people off, I was talking about resorting to unethical behavior. I was not talking about charging enough to stay in business or even charging high prices.
For example, someone calls an EC and wants to have some electrical work done, but they don't know much about what's involved or what code requirements are. An unethical EC could upsell the job and tell them they really should also do x, y, and z for "safety" or "code" reasons. We have special knowledge and experience that the average person doesn't, which is why we deserve to be paid decent money, but it's not a license to take advantage of people who don't know the difference between work that is really needed and work that is only being done because the EC wants to make more money. We've all heard stories about the mechanic who tells you your muffler belts need to be rotated.
I've had people call me up and ask me to do work that was clearly unnecessary, but after I talked to them about what they actually needed, I was able to propose an alternate solution that saved them a bundle of money. Sure, I could have kept my mouth shut, done the unnecessary work, and made more profit, but I think as pros we have an obligation to treat our customers as we'd like to be treated and not take advantage of their ignorance.
Recently I ran into a plumber who was playing these kind of games with a homeowner. In addition to going on and on about how the plumbing was going to need to be all ripped out and replaced, he was jumping up and down about how dangerous the wiring on a water heater was and how the homeowner needed to get an electrician to make things right. His original protest was somewhat warranted (the wiring was messed up), but after everything was fixed by an expert EC I handed the job off to, he still kept claiming the homeowner needed to bring in an electrician because he didn't know how to kill power to the water heater so he could work on it. That claim was clearly bogus, so the homeowner fired the plumber. I'm guessing that this guy (state and city licensed master plumber) was just looking to pad the hours and was spreading it around to other trades, hoping we'd return the favor someday.
Sometimes it gets criminal, though. The news recently had a story about a GC who took advantage of an elderly couple and charged them several hundred thousand dollars for "repairs" and "remodeling" to their tiny $100,000 house. The house is now in a state of half-finished work, and much of the work the GC did was bad, anyway. More work will be needed to fix what has been done already, and the elderly couple is tapped out. The authorities are prosecuting on felony fraud charges, and the GC will likely wind up in jail. The woman, when asked why she spent so much money, responded that she had no idea how much remodeling work costs.