Hi Eric,
If you plan on sleeping in albergues each night, then you should be just fine on your own.
If, on the other hand, you plan on renting private accommodation, the travel service may be a good way to go. That sounds like a LOT of money! I walked two years ago and spent just over $1000 for the entire 6 weeks. I ate quite a few picnics, and slept in albergues, but didn't suffer. Does their cost include private lodging? Does it include meals?
If this includes lodging, I still think it's a bit high, although the time to make all the lodging reservations is worth a salary. I can tell you from experience (because I am leading small groups this year) that it takes hours and hours to make all the necessary bookings (in Spanish).
Your decision also depends on what type of Camino you are planning. Are you willing to sleep in a room full of 25 to 100 snoring, bag-rattling, whispering, coughing, sneezing, farting pilgrims? ::laughing::: It's actually quite fun! Or do you need a dark, quiet room to sleep? Must your family all sleep in the same place, or are you willing to split up if the albergue is full? Do any of you have special needs?
Lastly, it depends on what time of year you are going. If you go early spring or late autumn, there is less rush for beds and more chance your family will sleep in the same albergue. In spring, less change of bedbugs.
In the end, thousands of pilgrims go on their own and do just fine. Prepare your family not to expect more than is reasonable and you will have a wonderful family experience!
Annie
http://www.anniecarvalho.weebly.com