Sorry I wasn't more clear Doug, the $3.75 is just for labor! With materials and possibly a trip charge added in (since you're doing a smaller area) that isn't too outrageous if they include supplies. If you can find a handyman or tile guy that does side work, they can probably do it a lot cheaper since they have no overhead. In your part of Texico there should be an abundance of tile guys looking for work. I used to ask the guys who come to the office to repair stuff about doing side work for me, got some great deals on drywall, tile, etc. Might check with your office manager to see who they use or if they have anyone coming in to do maintenance so you can hit them up.
It sounds like your contractor was quoting you a fair list price, you might just see if you can negotiate them down a little (10% or so is reasonable). Don't squeeze too hard as you don't want your contractor giving you cheap work.