That's not bad at all, if it's a good server and good bandwidth.
Think about it, save a hundred bucks and lose half your customers from shity connections, or pay a fair price and provide a quality service.
If anything let them know and see of they can get a you a little discount.
We charge $299 for 500 gigs on a 100 meg line.
http://www.adult-website-hosting.com and have about 70-80 customers at this price point.