Very small town here. One lady that does custom embroidery as far as I know. She will do it on just about anything but mostly does those heavy wool letterman's jackets. To put on the school logo (about a 3 1/2" cirlce design w/ 2 colors) on the right side chest area of the coat is $20. Names in the hood are $5 per letter with a $20 minimum. She charges $20 just to sew the silly sports letters on after the kids win them.
Try not to let yourself be taken advantage of. If you make anything for one group at a low end price, every group in town will expect the same treatment.
Maybe you could quote them a price that makes them provide the fabric. If they see the cost of fabric, maybe they will go away.