Anil Dash has some sage advice for freelancers:

I talk to a lot of consultants, freelancers, and small businesses who do web work, and I used to be a freelancer myself, so sometimes I get asked for advice on how to price one’s goods and services.

I think I came up with my best suggestion today, and it involves only two simple steps:

1. Slap the client in face.
2. Tell the client your hourly rate.

If the person looked more shocked, horrified, offended, hurt, saddened, or wounded by the slap in the face, then you are still pricing yourself too low.

Your mileage my vary, this is not to be construed as legal advice, eye-poking may be substituted for slapping in some states.