I am currently a student, so I can offer the payer's perspective. I take piano lessons from a woman with a degree in piano pedegogy(teaching private piano lessons) and she charges me $38 an hour. My french horn instructor is Corbin Wagner, and he is in the Detroit Symphony Orchestra. He charges $60 an hour. In March of 2009, I asked about a lesson from the french horn professor at the University of Michigan, and he charged $100 an hour. I'm not sure if his price is still that or if it has changed. A friend of mine at Indiana University is earning her bachelor's degree in flute performance. She takes lessons from a guy (not her professor)who charges $275 an hour! I charge $10 for a half hour lesson for begining piano.
I guess I would suggest to pick a price you would be happy with. Then, if 1 out of 5 people will take lessons from you due to cost, lower the price. If 5 out of 5 take it, try raising it for the sixth student. I know it's awkward to talk money with people, but they want and need your service. If they decline your service due to cost, offer a lower price, or try somebody else.
Note: All prices listed above were current prices of August 2009.

