This is a dilemma I have seen come up here before.
In reality, only you can determine what is a fair rate for the work you perform in the region you are in.
To a certain degree.
Pricing is one of the trickier aspects of the business, for those just starting out on their own... but you will catch on real quick, as most end up eating their shirt on a few jobs in the beginning - and it only takes a couple of these before one must realize that their pricing is too low. (Sound familiar, anyone?
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As far as lynjo's suggestion of bidding on a time + materials basis, I have to agree. When I first started out, most of the local painting contractors were bidding on a time + materials basis - so I just did the same. Lucky for me, it gave me the opportunity to "learn the ropes" without going broke by bidding my jobs too low.
Don't worry - either way, you'll work it out for your future jobs... just get yourself through this job, do the best work you can do, and land the next gig.