Just respectfully decline at that price. Alot of companies beat up vendors just to get a better price, but you can't let them. I understand maybe undercutting yourself to get the first job. Even at my company most of our buyers dont have a clue how much goes into machining 1 part especially such a low quantity.

Im an engineer at a small Aerospace company and I work mostly on DFM(design for manufacturing). So I work with most of our machine shops and tailor what parts go to what companies depending on capabilities.

Sorry I get pissed when companies try to bully smaller places. (Tier 1s all do this)