The idea is to seperate the outside water which goes into the ground from the inside water which goes into the sewer.

With seperate meters you pay just for the water and not the sewer fees when the water goes outside.

Your plumbing has to be seperated though, it doesn't help to just stick a meter on any old section of pipe.

On first glance the price quoted seems a bit high but there are some variables to be considered here.

No doubt you currently have more than one outside hose bibb and each of those is probably just connected to the nearest branch line to the hose bibb location. To isolate the outdoor water to a separate meter would require running new water lines from the meter location to each respective hose bibb.

In nearly all communities that supply water through a municipal source the municipal supplier retains the actual ownership of the metering device. In order to get a second meter you would have to file for a permit to create an auxillary water service just as if you were splitting the utility cost for an apartment unit. The permit fee alone could account for half of the price quoted, or more.

In one jurisdiction near here we may not split an incoming water supply line into two or more units. Instead, they require a separate line from the street for each meter. I recently did a rework for a multi-family dwelling that has 5 separate apartments and in order to separate the water utility cost we had to run 4 additional water lines in from the street main and the city charged $1100 for each tie in.

Hendricus has the reason right.

I understand the need for splitting pipes--the water authority inspects to make sure you're not cheating.

while I have more than one hose bib, the idea was to put it on a run to only one or two of them, which would be the main ones I'd use outside.

From what I understand from the water authority, their charges are extremely limited--there's an initial fee plus a monthly "metering" fee, both of which are modest. This is for the plumber's labor and parts.

Okay, now I understand...an "additional" meter. I have the same on my house. I added an irrigation system for the lawn and had a meter put in for that. I left the hose bibs on the house in place and just hooked into the palstic piping in two places and created stand up hose bibs. So for washing cars or the house I use the hose bibs from the outside water lines. The original hose bibs were left in place but are not used.
I had to buy a meter that has a remote readout....$100. Had branch run off the main in the cellar, put a meter on it and ran it out the cellar wall. So, meter was $100 and labor and other parts were $150 to the guy installing the irrigation system. I get two bills quarterly. When the outside water is not used in the winter, I still get a very small fee.
If most of this cost is for rerunning things in the house, I would suggest doing something similar to what I had done with the hose bibs. It could save you some money.

Did you try getting bids from a couple of other plumbers? That would be your best way to determine if the cost was in the ballpark.

There may also be a requirement for an anti-siphon device to prevent backflow, not to mention the possible need for a pressure reducer, a meter box, excavation, etc. Did the plumber you spoke with indicate what was included in the scope of his proposal?

You can also have a second meter, downstream of your main meter, that measures the amount of water that is consumed but does not lead to a sewer (irrigation, etc)
My swim club's pool drains to a french drain, so the sub-meter registers the amount of water to be subtracted from the main's total in order to calculate sewer costs.
This does not require a second tap off of the main line or a wye before the meter. The water company requires this set-up since the total water consumed is then used to calculate average daily consumption (ADC) and, the higher the ADC, the higher the per-1000 gallon rate.

In Atlanta, that'd be spot on. The city charges about 2 grand just for the meter.

Water companies are rip offs. In Hawaii 80% of our bill is sewage. 80% of our water is for irrigation and they put all kinds of obstacles in the way of a second meter.