What DiligentMinds.com said. Great post.
The only things I would add, is make sure you look at similar commercial products for price, features, and quality and compare your solution to that. If the commercial solution sells for $1500 and your thing does the same thing, then assuming you have the same quality you could sell yours for $1500 as well. Don't cut your own throat on price just because the components are cheap. Sell it for what the market will bear.
The other reason to look at commercial solutions is to make sure you both are on the same page as far as how much it would cost. Using the above fictional price of $1500 per commercial unit, if your prototype thing is going to cost $5000 after R&D cost to do the same thing and the guy only wants a couple, its not economical for either of you unless your thing has an additional $3500 worth of features or he plans on buying a huge quantity. Take the cost of a system of multiple commercial products that together includes all the extra functionality you are proposing as well. It might still be less than what you could do for a prototype.
I'm assuming you are doing this as a hobby, but if you were going to start a company in the aquarium automation industry, you could use this first customer as a platform to help subsidize the R&D necessary to develop the technology that will go into your other products. You could give the guy a break on the R&D cost because you are going to use that same platform to make a bunch of money with other products and other customers.
The easiest way to go if you are not a professional is to "no bid" anything that isn't for yourself or for a really close friend or something who knows it won't be professional quality and accepts that risk. You either learn the right way to make a commercial product from other experienced engineers who can catch your mistakes, or you make those mistakes yourself and run the risk of killing someone's $10K (or way more) system like AcHmed99 said.
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