I actually look at retouching primarily as a value-added service that photographers can offer their clients. No photographer can get a model hooked on his/her work unless you can consistently make that person look flawless—and contrary to what some will tell you, everyone wants to look flawless. Period.
It like how movie theaters make little to no money on the actual movie—they make all their money in concessions (like $6 popcorn). Or Blockbuster makes all their money in late fees, etc. It's very difficult to make money in photography because of the enormous overhead required for lighting, cameras, studio, support staff, etc. But retouching has no overhead other than time.
When I started Slickforce in 2004, I made almost NO money on any of my shoots, and I, in fact, willingly LOST money on the majority of them. But I knew I was making a long-term investment in my career. So, in order to finance the growth of the business, I decided to become a kick-ass retoucher well before anyone knew who I was in photography.
To answer your cost question, rates vary depending on clients, but retouching can cost a customer anywhere from $10 to $1000 per photo (the higher end would also include composites or special-effects work). The bigger the client, the more they will happily pay to insure your standard of quality.
In those first few years of Slickforce, any money we had came from retouching, and to date, it's still our single most profitable service (we currently retouch over 10,000 shots per year).
Hope that answers your question.
-Nick
Owner, CEO
SlickforceStudio - You. Perfected.™
www.slickforce.com
www.nicksaglimbeni.com