I think £20 per hour for the Sim is not unreasonable as long as it is a good one. Most students will recognise that getting things right in the sim might save time and cost in the air later, so the time being non loggable is less of an issue. For it to be productive, the instructor needs to be THERE, not dipping in and out as could be the case. If the instructor devotes propper attention and training, then they should get their hourly rate.
£40 p/h is not a huge amount, considering the time / dissruption / and dissapointment that bad weather inflicts on keen students.