The OP is clearly operating as a contract pilot. I am in the same boat. There is a huge difference between being on the payroll and being a contractor (in any line of work).
To the OP, I'll agree with those that say he showed poor form in charging the owner for his time to meet insurance requirements, for two reasons. A) The owner could have just found someone who already met the mins, and not had to even pay the expenses of the airplane for that time period to get him insurable, nevermind paying him and the CFI. B) The value in that section of the equation is the free time and training he would have received. Remember, he is not on payroll, he is a contractor.
The other big mistake the OP has made is relying on assumptions, not negotiated terms laid out in a contract. Assumptions kill business deals everyday. Never assume anything, and always get things in writing.
The real world lesson here, is that there is often a very fine line that separates being paid for a service (especially a highly skilled one) with not charging a client for the purpose of networking for future opportunity. Small example from a few days ago: A good friend of mine runs a very high end car detailing operation. He recently got a real PITA client through a random referral. They talked about rates, and he told him that "a full details starts around $250. The key word there was "start." After mentioning that, the owner of the car asked for a few extra things, and my friend quoted him $300 for the job. Well, he did the job, the owner was ecstatic with the results, and he left him a check. He didn't look at the check until later, but then when he did, realized the check was for $250. The owner actually called him the next day, and said "hey you know, I think I shorted you a little bit on your bill." He said "well, it should have been $300, but don't worry about, I know I'll see you again." (He's VERY confident in his work, and has every right to be) Well, the owner said "I'm happy to send you a check for the difference, or I'll send you at least 10 referrals, which would you prefer?" I think the answer is obvious, and I have been in exactly the same position before.