Provided the booking was made on a
credit card, and irrespective of whether the merchant is FC or QF, the charge back route has several advantages.
Once the charge back is processed for services not supplied, you are no longer waiting for QF or some one to get back to you, or make an offer you are happy with. If you charge back the whole transaction, they will be chasing you for payment. They are indeed entitled to fair payment for what they delivered, but as you have the money back, you need to agree what is reasonable (i.e. the net payment), hence what the "compensation" is. If you don't agree, they have to chase you - and ultimately pursue you via the courts. As soon as you have processed the charge back, advise FC or QF (or both) as appropriate, and state you are willing to pay the fair value for what was provided, but that you must reach agreement as to what is fair. Make sure you keep copies of this communication. Should agreement not be reached, this could be important to the way an outcome is eventually resolved.
Should it come to that, they will have the burden of proving what is fair (and they know it). It will also not be their interpretation that prevails, but that of a court or tribunal - which they also know.
Given that all this will cost them in lawyers and processing, and they well know that they are liable for damages, they will be much more reasonable about what they will accept - once you have the money, rather than them.
Credit card charge back is simple and powerful in these circumstances, so take advantage of it. This is one of the reasons I always pay for the airfares via CC - even when incurring the fees. This protects against non- delivery for all reasons, including insolvency of the provider, which most Travel Insurance policies won't cover.