Why does a low re-do rate matter so much to pricing?

Because re-dos are paid for out of your margin. A job that comes back consumes bench hours a second time while producing no additional revenue, so a 10% re-do rate removes roughly 10% from your effective hourly rate before you have made a single pricing decision. For most shops, cutting re-dos is a larger and faster win than a price rise, and it does not risk a single customer.