What's astonishing is that the parts he ended up using cost him $300 [1], less than half of what a new phone would cost. The parts come from recycled / broken phones, so he effectively has a Franken iPhone. I'd take it.. wonder whether it starts creaking later sometime.
I've constructed Galaxy S_ series phones from eBay for about £60 a shot by buying a lot of faulty units and salvaging good parts. It's no harder than building a PCI-based PC in the late 1990s.
They are good solid phones other than the EMMC on the mainboard which tends to fail, but good boards are easy to find in phones with smashed screens.
It's worth including but that's like including R&D into the cost of any device. Like saying an brand new iPhone 7 doesn't really cost $649 but really costs $100......0000 due to the R&D it took to make it. I have confidence that while the first phone cost him $1000 the second would cost him $300.
If we are looking at it like a business then your math makes sense. But as an individual, it would be cheaper just to buy a new iPhone because of the dead ends and time spent assembling the device. So yes if he did everything perfectly the first time then the cost was $300, not including labor or tools. But the actual cost is way above $1k including labor, tools, dead ends and research. A business can factor those costs as R&D as they will producing x amount of these but he is only going to produce 1 and who knows if those tools and parts will work on future projects.
[1] http://www.arykar.com/guy-builds-diy-iphone-6s-for-less-than...