Before you get too far into telling this potential client how much more he's paying than he should and offer him to do it for him MUCH cheaper ... you may want to research a bit further.
First, you don't know the actual hosting situation as molona stated. First, I would never recommend a client to host on godaddy.com or one of those "cheap" hosting sites ... as they say, you get what you pay for. I have worked with many clients that were originally hosted at godaddy.com and experienced very slow load times and lack of customization. For a business that is putting an emphasis on their website representing their business, you need to find a host you can count on. Cheap shared hosting packages are a dime a dozen ... but I wouldn't ever recommend them to a client.
As for their hosting, they are not simply paying $96 for hosting, they are probably utilizing their eWorks XL package, which included the creation of their website, the hosting as well as many other features (including an hour of free updates each month and a toll-free phone number with call tracking). Does godaddy.com offer those services? Are you able to offer those services on the side if you set them up with a different system? If they do not use these services, then perhaps moving them to a basic host is an option, but if not, then you cannot simply promise them it would be so much cheaper elsewhere.
Regarding the domain, that could be a tough call. You'd have to do a Whois on the domain to find out if they're listed as the Owner or one of the contacts on the domain registration. If they are, then they would be able to transfer the domain somewhere else. If they are not listed, then they would need to convince the company to release the domain. If they are not willing, that is when I would believe they are a shady company. Otherwise, I don't see how they are a "crooked moneymaker", they offer a service and the amount they charge is what their business offers. You can find anything for cheaper, but it's not always the best option for everyone.
As molona stated, you would need to get all of the details first before you offer anything too advanced. Find out if they are using the toll-free number, what features they are needing, how often they update and if they even WANT to update it themselves. Perhaps they like calling someone to handle it for them instead of having to learn a CMS program to update it?
So I would hold back on the promises and talk with them about the scope of the project, their needs and expectations, then figure out what the costs would be to set them up. It may be a little more advanced than you think.