Darren that sounds like a good deal as when i bought my e30 in 1999 i had both arches cut out and replaced and the bonnet resprayed and also the front arches cut out where someone before had mudflaps fitted and they had started to bubble and that all came to £300.00.
So i think what you have been quoted is reasonable.
Have you used this place before?
Are they recomended and have you seen any of there work?the reason i ask is i had a sierra 2.0 ghia in 1996 in a champagne mettalic,which was suffering from a bit of tin worm(well a lot actually as old fords do!)and i went to a little place near billericay all looked well and was reasonably priced, i never saw any work they had done before and when i got the car back the rear arches were a different colour to the rest of the car!!
Being that the car was almost worthless i suffered it but as you have a decent car i would be looking to see some previous work they had done as this can vary extremely!!
And now you can stop laughing at my pre BMW car choice's!!!