Independent Contractor Suggestions

Hi List, I'm currently working on a medium sized project as an independent contractor. The project is reaching the 2000 hour range and the client has asked for a project cost. The problem I have in providing the client with a proper estimate is that the client is a start-up and does not have the dollar amount the project will actually cost (@ an average of $20 per/h the cost is roughly $40,000, quite cheap in my opinion considering the project size and required functionality: logins, cms, mysql, ssl, payment systems, shopping cart, and functionality specific to the user type). I wanted to gain some suggestions on alternative methods of making the project cost reachable to the client, while also allowing me to make a profit. An idea that sounded very good was to agree with the client on a minimal system and upon delivery allow them to place a cost on what they receive. The problem I have with this idea is that I'm afraid the client might not be fair in costing the delivered system. If you are an independent contractor, what methods have you used and what would you suggest? Greatly appreciate any response. My apologies in advance if this is not the place to ask. Thanks.