Free installation?  Seriously?  Do you really think the installation is "Free"?  Don't you think it costs SOMEONE to have that installation done?  Who do you think that is?  

Have you ever heard the phrase "There is no Free Lunch".

So, they increase the price per yard of the carpet to pay for the installation, and the consumer says "Your carpet is too expensive. I am shopping elsewhere."  Or they keep the price per yard of the carpet does, so it attracts the consumer, and make up the dollars elsewhere.  Do you get the idea?

So, here's the deal......  They have told you - up front I might add - you pay for the estimate, and you get the money back if you buy from us.  So far, they have held up their end of the bargain.  It sounds to me like you want to renege. Second, you have a price from them. You need to look at it as "Total package price".  Not price per yard and yardage.  They have given you a price to have the job done - provide the carpet and the installation. You need to decide if you are going to accept that price, or if you are going to look elsewhere. 

You need to get a second price from a different business - if you have not done so already.  Then you can decide if you want to buy from business A, or business B.  Period.

And it is not your decision as to whether you think others are getting ripped off or not.  IF someone else wants to buy from this business, that is THEIR decision - not yours. Maybe this business has the carpet that others want, and they are willing to pay the price.  That is up to them, not you. Period.