1. What the customer expects is very nice (for the customer).
2. If you do decide to do an inexpensive job, you should be doing it on a much less expensive material. I don't use any junk but I will do signs on 651 $100 bill or less a roll for 30" x 150'.
3. Just covering expense of material. That might be fine, depending on what you mean. If you are doing 10sf of vinyl lettering and charging $100, that means that with the above mentioned roll I am using 4 lineal feet of material and I now have 96 lineal feet of material capable of producing $2,400. worth of work at the above mentioned prices if efficiently used. That makes sense to me. It might not pay on the first job but it will pay and you are getting ahead.
4. If you want to make money now don't stock as much material. There are many suppliers that will send you cut yardage. Buy 5 yards of material for that one yard job and you will still take home a paycheck.
5. Any dipshit can cut a piece of vinyl and sell it, just look at the work you see around you. Quality is what will make you a sign man instead of just some other guy that has a plotter. Design is 80% of the job and quality installation another 15% the cut vinyl part is monkey work and makes up the other 5%. Why install something 1/8" off when it is just as easy and as quick once you know what you are doing to install it perfectly.
6. Sell them something that is worth something and charge plenty for it. You are selling a finished product, hopefully something that is going to make them lots of money or bring them lots of pleasure and satisfaction. The cost of your bit of material should almost be immaterial. You can sell a piece that costs you $10 for $20 and do $10 jobs to make $100, you will be out of business and possibly your home in a year. During this time you will have helped bring down the industries prices & reputation not to mention that of your customers. On the other hand you can sell a really well done job that costs you $10 for $100 and spend a little extra time making it worth something and develop word of mouth business and eat at the same time. I offer customers more than one choice sometimes explaining that this sign will look good for 10 years as opposed to this sign that will last 3 years and the price differential is not just the cost of the material. Sell the whole sign.
Good luck with your entrance into an exciting new field. Aspire to be the best that you can be and welcome to the community.