Prices for repair parts vary considerably depending on what brand and quality of part is being installed; not all parts are created equal. In addition, the hourly labor rate charged varies considerably from one part of the country to another, and even from one shop to another. The national median labor rate is somewhere around $75/ hr. if you call a couple of other shops in your area for an estimate over the phone, you can get a pretty good idea of the going rate in your particular area.
According to my repair estimating software, a brand new Toyota starter from the dealer parts department sells for $297.20 and it takes .6 hr (around $45) to install, so the estimate you have been given for a new starter is about right if you consider the estimate probably includes the diagnostic testing to make sure the starter is faulty and sales tax.
As far as remanufactured starters, some are good quality and some are rather poor quality. AC-Delco, Worldwide, Napa supreme, and other top quality brands are good quality and a little cheaper than a brand new one. Here is a link to an auto parts site where you can see what a good quality reman starter sells for:
I would advise staying away from the cheaper lines of remanufactured starters, such as the ones sold in discount auto parts stores. In my experience these cheaper ones usually do not last very long; even if they fail while still under warranty, all they do is hand you another poor quality one. labor and towing are not typically paid under warranty.
Edited by Steve7654 on 12/13/2010 at 3:16 PM EST