I replaced mine last year and spent about $90 for the valve, extra piping, and those nifty little connectors. If I had actually known what I was doing, I probably could've done it for a lot less, but that said, $90 isn't bad at all. I first worked my butt off trying to get everything cut out and installed, then realized I put it in upside down, lol. But about 6hrs and a few trips to Home Depot later, I got it done.
It's probably so expensive because the plumber is going to cut the piping and he may solder it back, which would probably be somewhere around 2-3hrs for a professional, including going to get the parts. You can probably hire a cheapo Joe-Bob plumber to do it for less and they could still do a decent job.
Looking back on it, it's really an easy job. You might want to reconsider doing it yourself. With a little more pre-planning than what I did, you can replace it and learn a little more about plumbing all at the same time.
Take a pic of it and where it is in relation to your house, whether inside a wall (like mine) or outside. If it's outside, $500 seems like taking advantage.