The first thing that occurred to me when I looked at option 1 and option 2 is where are the utilities running to the house (noticed location of electric meter)? Is there a septic system and where? Relocation of existing utilities can add a great deal of money. I built a 1200 sq ft shop on a 6" rebar reinforced slab in Oklahoma beginning in 1990. The shop is fully insulated, 9'11" ceiling height, 3 16x8 garage doors, walk-in door, 3/4 bath, finished walls, air conditioning, heater. I have resided and reroofed once. Total investment under $25,000.
I realize my main structure was erected almost 35 years ago. I did almost all the work myself. Still, your quote seems seriously high for a smaller shop. When dealing with contractors, the more solid your definition of what you want, the more accurate they can be with their bid. Do you have plans? Can you provide scale drawing of elevations and floor plan and detailed list of amenities - insulation, outlets, etc? Can you do any of the work yourself?
Based on the pics only and without the answers to the above questions, I would be pursuing the detached option.