Honestly, I'd charge $50/hr if the other freelancers in the area weren't charging $35.
Mhcasey, let me give you some advice, speaking from personal experience as a freelancer--charge whatever you feel like. If you're honestly worth $50, charge it.
When I started instructing I did it for $12/hour. No, that's not a typo, that's $12/hour. That kind of pay sucks, but I did it because I was hungry for hours, excited to be flying, didn't have many other options, and most importantly, didn't know any better.
Long story short, I moved to a slightly better paying gig ($15/hour) and burned myself out at that rate. I worked my butt off, incurred more risks than I cared to, and still had tiny pay checks.
Then I started freelancing for $30/hour. It felt pretty good, but still not 100% of what I thought I deserved.
Finally, I moved to a completely new area, started freelancing, and said to myself, "Screw it, I'm charging $45/hour. I don't care if I don't fly at all. I'm a darn good instructor, I've been around the block a few times, and I'm not giving away my skills for cheap anymore. I'd rather work at Wal-mart than fly for pennies." I honestly didn't know what to expect for responses from potential clients.
None of my students even batted an eye at me when I told them my rate. They just said, "Ok, no problem," and wrote the check.
I ran in to one guy, a student pilot, in a social situation away from the airport a while ago and he asked me about my freelance rate. When I told him $45/hour, he flat out said, "You're never going to make it around here unless you lower your rates. Even the most experienced guys in town only charge $35."
It was an interesting conversation to say the least. I politely told him that I felt $45 was a fair rate and I wasn't interested in teaching for less.
Frankly, I'm tired of dealing with people who pinch pennies. If they're really freaking out over a $10/hour difference between me and the other guy, I don't care to fly with them. I'm all for saving money, doing things affordably, etc., but it seems like some of these guys flying around in beat up old 150s don't recognize the *value* of things. If they're only choosing an instructor based on price, and not quality, they're missing the big picture. That $10/hour difference doesn't mean much if the cheaper guy isn't as good as the more expensive guy.
Ironically, that same student pilot telling me my rates are too high, also complained to me in the same conversation about how his current instructor wasn't very good and never had time to fly with him.
Anyway, I've gotten rambling here. My point is that my higher rates attract serious, high quality students who know the value of things. In the past few months I've flown with an investment banker, trauma surgeon, and business owner. I work hard, give them their money's worth and we've always gotten along great. I don't fly as often as instructors at big flight schools, but I can certainly compete with any freelancer in town who only charges $35/hour. If the student cares that much about price, let them go elsewhere and let your reputation speak for itself.