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I run into this problem a lot... I quote a per song price, and people always give me a ridiculous look- which leads me to tell them they could hardly RENT my gear for what I charge! They still don't get it... I say, if you really believe in a band/musician, then do what you can to work with their budget... if you think you'll be annoyed by them, then charge more!
I just did a free song for my friends new band, and they're already planning on doing two more for my asking rate, as well as top friended me on myspace, which has already lead to another band messaging me... And, the free song went SO smooth, which makes me want to work with them again anyway.
Who knows...
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