I have a loyal customer who wants me top cut a 2-3 video out of a 30mins DVD. Plain and simple, no effects, no music just select certain parts of the DVD, cut it and deliver flash content. Considering that more of these kind of jobs could come after, I could do it very cheap as appreciation for their loyalty but I know that it would set a 'dangerous' precedent as it's happened in the past.
how much would you charge?
You need to charge what you feel your time is worth. How long will it take you? What are your hourly editing rates? You're right about setting a dangerous precedent. Once you offer a client a very low rate, that becomes your (very low) rate with that client for now on.