Actually grades given by recomandation are in some associations more expencive than those given after a formal test.
My first teacher received both his shodan and his nidan by recomandation. I think perhaps the shodan was by Ichimure sensei and the nidan was by Nishio sensei, but I'm not certain. It was many years before I took up aikido.
In my experience grading by recomandation is often used when a sensei travels far to get to a country where aikido is in the making. In some situations it is used to promote good people with a lot of experience, who for some reason don't want to test.
Of course grading by recomandation is the only real way for political gradings.
Just a few thoughts on the matter