Need some pricing advise please.

At least here in Ontario a school board won't pay that kind of money for headshots and have so many restrictions on the use of the images. I don't know how things happen in the US but here in Canada,most government jobs get tendered out and multiple people quote for the job needed. The lowest price isn't guaranteed the job, but it raises the odds of obtaining the contract. To finish I don't think you should undercut the job to get it, but you should be competitive in your pricing.
 
Actually there is a chance they might want to hire me as one of their vendors on a permanent basis, so this could be a decent business opportunity??
 
EXACTLY how I was thinking about approaching the situation "yioties". Also your district sounds very similar to this city, which is why I was surprised how much people get for that type of assignment.
 
Becoming one of their vendors on a permanent basis should change how aggressively you price this as well! Come up with a price that seems fair for you and go for it!
 

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