Many frame shops make a huge profit margin on frames, and this is ok. But, they should not be against others making a profit. That is why I asked what their policy is if you damaged a frame while installing it. There is no difference between a damaged print and a damaged frame. You have to either decide on what your policy is and stick with it. Your policy has to be one that leaves you without any regrets at the end of the day.
I used to tell my customers that if they had a print damaged while having it framed etc, I would replace it for them at no charge as long as they returned the damaged print to me. The replacement print would have the same number as the damaged one as it is an exact replacement. I never had to fulfill this promise, but I was always prepared to do so. I looked at it as being an investment in the future. I would hope that the customer would return to me for more business. As I said, I never had to do this, I am not sure how I would actually feel if I had to do it...lol. But, I think that I would be able to live with it.
To sell the replacement print at a lower price is to reveal your private business information. So, I would either replace the print for free, or at full price, nothing in between. And I would always bring this subject up when the original order is placed, or before, whichever is appropriate.