There's a thread on bereavement about this.I think the stone has to be lifted, taken away then replaced. Someone had a post about in-situ engraving but I think it depends on how deep the letters are engraved. Check the Bereavement thread for details
Sounds about right to me. My nan died last year, we had already bought a double plot when grandad died 25 years ago. They charged £900 to move the headstone and open up the grave and another £700 for the engraving/cleaning the existing engraving/stone.
I'm in the process of putting my mum's details onto my dad's headstone. They want to remove the stone, take it away to put the inscription on then replace it (it's leaning hence why they want to move it). The cost is about £750. They wanted another £200 to clean it, I prefer it looking a bit weathered, thankfully.
The headstones usually need to be taken away because many are only secured in place on a blob on cement, and if they start to lean or are already leaning the cemetery authority (often the council) is obliged by the Health and Safety Executive to lay it flat and require the family to pay to put it back securely anyway.
If the headstone is firmly secured in place, an in situ engraving is possible (as at war memorials) but this is pretty rare.
Funerals and funerary arrangements are an expensive business. I think that's why cremations are becoming more popular to be honest.