I was there about two years ago...

The biggest determining factor will likely be the going rates in your area for various "skill levels".

When I started, I charged $25 a song to track, the same to mix. I put a lot more time into multitrack fiascos (as you put it) than I got in monetary return.
But I didn't really have any portfolio to speak of, and people I knew that were experienced and had steady business charged 10 times that. I figured they had 10 times more experience, and I needed to get work (PRACTICE).

As a result, virtually all of my free time has been booked doing sessions for almost 2 months now. I recently stepped up my rates to $40, respectively, and intend to make a similar hike in the near future.

So, I correct myself:
It's about what the time is worth to you
AND
what the prevailing rates in your area happen to be

Or, specifically in my case, finding the right balance between luring clients and making sure it pays for itself.

You do good work, I would avoid the temptation (if you feel the temptation) to undersell yourself, whatever that translates into in your market. You can always lower your prices later on if it's not working, but competing on price is never as good as competing on quality or some other competitive advantage you have over others in the area.

Thanks guys

To answer some of your questions

- there are 2 studios in town, one is charging $25hr and the other $40 hour. Seems like the bands aren't interested in these studios, possibly due to thinking I'll be cheaper? I know both bands (the one band's drummer is in our band), but they are all 15 years younger than me so I wouldn't say I hang out with them.

-One band that asked me had previously paid $1000 a song for their ep somewhere else and it was at least 3 trips to the city 3 hours away. The other band paid nothing for their demo which was done by a friend and they basically got what they paid for.

Both bands have excellent musicians and play really good original music that I love. I guess that's what made me even consider it. If I do good work, it would be great advertising for me and the bands. If the band or the music sucked I wouldn't of even considered it.

Our band is doing a gig with the one band and we're getting paid $200 a set so I thought I'd make a proposal to them. This would get me $200 cash upfront. I'll charge $200 for a quick demo for 3 songs ( that would be everyone playing in a room and 1 vox overdub, mixing and mastering) or $200 for a full song. Does that sound fair to you guys?

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Well I talked to the one band, I told them $200 for the 3 songs, they wanted $200 for 4 songs, then they started to spew off all the incredible things they wanted for that cash. I told them I want $15 an hour and told them they should get quotes from other studios and sample their work

They're going to borrow some superlux mics from the music store, not use any OH drum mics and record themselves in their basement, with a br1600, maybe it'll sound great, who knows.

I'm going to record the other band for $15 hour, I know it's not a lot, but it will at least be worth my time and they want to do a good job of it.

Thanks for the input

Yeah, you're better off charging by the hour.
When you charge by the song, the song will never be finished. There's always another thing to fix or overdub. Another mix to make it better. and on and on and on.

So if the going rate in town is $25.00/hr. That's what you charge.
But of course, there can be deals if they want say, 4 songs. Maybe that's $20.00/hr. - 6 songs for $15.00/hr. etc.

Giving a discount always works better than making that lower price your regular price.

You can start, stop, or modify the promotions at any time as circumstances permit.