I always do non-profits like churches, for free (greatest advertising value that I've found).
My standard per hour charges are:
$125 p/hr for coding
$165 p/hr for consulting, support, & frivolous meetings
What I prefer to hourly rates, is to sit-down with the customer and determine what they want and then give them a quote for each independent component a la carte. The big drawback to this method is early on you will burn yourself by under-estimating the projects complexity and/or overestimating your own ability. Don't give-up and don't go back to the client asking for more money, eat the loss and chalk it up to tuition expense.
Never apologize for your prices. The mechanic down the street doesn't apologize for charging those exact same hourly rates, why should I? If you always deliver what you have promised on time your customers will be glad to pay for your services.
I agree with Tom get to know and play nice with your competition. I subcontract work out to several of my competitors when I'm busy. They're always happy to return the favor when things are slow.
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