Wow, $22 CPM. Very nice job on finding such an advertiser. Either, I don't think you should charge too much. Since they are allowing you to give out the product for free. And in return, it's actually making your site more popular since you have a contest going.
@RichUser That is what has gotten mee confused abit as well. Their 2x 100USD product cost them around 2x 35USD. As it is common for designer brands to charge 3x to 5x the cost price. So what do you suggest I charge?
I don't think that matters. The retail value of the item is $100. They are giving you a $100 Prize Contest. Which I'm sure many people will enter.
Since you're giving it away yourself, do it for free. Tell people you're giving the bags away at the end of the month to a random member of your email list. This lets you build up an email marketing list and promote your site while giving away something very relevant to your website. I'd do it for free