Competing on price is a losing game. The customers that want a cheap price will be the most work and hassle. They simply don't value the product or you i.e. "Why should I pay someone much to type for a few hours?"

It's not intuitive, but raising your price will signal that you and your work are more valuable AND you will get more and better customers. Consider this: when you shop for something (that you don't have a lot of knowledge about) I bet you use the price as one indicator of quality. Same for services: Your customers will think "If he can charge $XXX hour, he must be good."

It is so common to devalue your own abilities as developer that it is a cliche' (Google "imposter syndrome"). In reality, your ability to deliver real value to a business/client happens long before you consider yourself an "expert".

I have 2 rates. (1) Free (2) Full price. In my experience, customers don't appreciate introductory discounted rates. Instead, they feel ripped off when you start charging them the full rate.

I don't have time to find the links now but HN'er Patrick McKenzie "Patio11" has written great stuff on this. See his blog on Kalzumeus Software.

In London, Cyanide Springs, Oklahoma, or a rural village in Vietnam?

Depends on the country. In The Netherlands (and perhaps most of Western Europe) I don't think it's wise to go much below 50 EUR an hour (ex. VAT) when freelancing.

back when I was still in the university around 1999, I would charge $15 to $20 an hour for freelance web based projects. I think with a greater demand and the general price of things you could charge a bit more if you are in the US or Western Europe. That being said, $15 an hour is a top rate for a senior software engineer in the Philippines. I recently interviewed a few programmers when I was in Manila.

Seattle, WA