In fact I wonder if that's what he's done - added on 23 per cent of 2500 ie 578.97 as you say, then added 23 per cent of that 578 which would be around 130, then added 23 per cent of the new 130, etc, etc, until he got to 3,253.51 and gave up - my maths isn't up to checking! but it sounds possible!
It reminds me of having to work out radioactive "half lives" in physics at school - the calculation is infinite because there is never a final answer, you just keep adding on tinier and tinier amounts.
No. As Graham says, every artisan, no matter what business structure he uses, has to take all his business overheads into account when he fixes his price for the job, and if this guy didn't then more fool him. The price quoted for the job is the price that should be invoiced for and the price the client should pay. The artisan subsequently pays his cotisations and taxes out of what he earns but that's his business and nothing to do with the client.