So I doubt if competition is a factor in Palm Labs closing
I don't doubt that at all, and your price list comparison has virtually no meaning in terms of trying to understand what's going on.
Let's say you get 4 quid revenue from developing a roll of c41, how much or that is EBIT? And EBITDA? Now figure how many rolls you're likely to be given to take care of a week in this "booming" market. I have a feeling that in a place like Birmingham, you should be happy if your lab gets to process 150 rolls a week. Alright, be generous, make it 250 (oh, if only!!) After all, out of the million or so population you're serving, how many shoot film, how many of those shoot color film, and how many of them bring it out for processing?
So you're two guys living off a camera business so your business needs to turn let's say 1000 quid a week profit at the very, very minimum just to eek out a marginal existence for our two boys that is only slightly better than a cardboard box under a bridge. In this scheme of things, film development is in the very best case scenario the icing on the cake, but not really the cake itself. What do you do if the lab nextdoor turns out to be just a little leaner, meaner, better known and basically just has the edge?
This market despite its phenomenal growth (which I'm not sure how phenomenal it is, but let's assume it is) is still a very tough place for a street corner lab to make a living in. And that implies that there's just not a lot of room for colleagues. Any competition will basically be cut throat. It's only the best, brightest and most fortunate who will survive for any period of time.