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I think before you even consider taking on the job, you need to decide if photo re-touching is something you want to do for your business.
I don't think there is any harm in stating that it is simply beyond what you can afford, depending on the quantity involved and the total scope of what needs to be done. To be really honest, and assuming that Gaelen is right and some immages might take 45 minutes to sort out, even a modest samling of 3-4 images as a trial retouch, with a distribution from best to worst could take you 2-3 hours just to estimate the scope.
There is no need to attract future business by fixing the photos, because the job has come back to you to sort out, so they already know and to some extent have admitted you would do better.
Its up to you to decide if this is really your business, it could bring some consistent money,
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