Contractor costs were way off, do I still pay it?

I used a contractor to finish my basement and the costs came in where we had agreed and it was well done. He offered to build me a shed for about $2K or so and I agreed. Well, the shed came in at $6K!! He apologized, said he underestimated the labor involved when we made a couple of changes and he brought the invoice down to $4,500 which included the actual cost of materials and labor. In other words, he realized no profit. So…I budgeted for $3K but not for 4.5K and he isn’t swallowing any of the added cost, only removing his profit. Is this fair? I have not agreed to any of it yet. The shed looks great and is probably worth the $4,500 but I didn’t ask for this and would not have pursued this had I known. Thanks.