Heads up: long post. But well worth the read if you're interested in doing custom work.

Custom work is all I do. I dabbled in off-the-shelf products years ago, but there just wasn't enough fun in it for me. I'm not one to find the motivation to say "OK, time to make that new tank-top in 25 different colors" every day. I wish I could do that, actually, because I'd probably make a fortune off it if I did, but it's just not me.
I'm a consultant. That's what I'm good at. I enjoy working with people (even if the majority of it isn't face to face). When it's for a client, I'm ALWAYS motivated.
I advise my clients on what will and won't work, what's compelling and what's not, as we shape their vision together, and then I bring it into reality for them. That planning process can take anywhere from a day or two to several weeks, depending on the complexity of the project, and the communication skills of the client. All the basic details go in writing, in the form of a project proposal. Assuming the proposal is accepted, and we've agreed on a price, I then draw up a contract which has all the same information in it, along with all the requisite legalese, and then I don't lay a single prim or paint a single pixel until the client has signed it. Nothing happens until it's a certainty that they know exactly what to expect from me, and I from them.
In other words, I run my business like a business. I do precisely the same thing as every real-world (competent) professional consulting architect, graphic designer, programmer, etc. Consulting is consulting is consulting.
As for rates, at the risk of sounding a little harsh, frankly, I weep for those of you who can't bring yourselves to charge what your worth. Briana, you're absolutely right that L$2500 per hour is not worth your time. That's less than $10. That might be great if you live in an impoverished country or something, but in many parts of the US, it costs more than that just to eat a decent breakfast.
I hate to break this to some of you, but really, professional digital artists typically bill at anywhere from US$30 to US$300 or more per hour. If you're good at what you do, open your eyes and realize you're a valuable commodity, worth serious money. Otherwise, you do yourself a very real disservice, both financially and psychologically, by working for micropayments.
I choose to work with clients who can afford to pay me what I'm worth. Anything less, and what I do becomes a hobby, not a job. That's not a direction I want to go.
That's not to say there's anything wrong with being a hobbyist, of course. If you get enjoyment out of creating for SL, and making it a job is the furthest thing from your mind, great! Keep right on doing what you're doing. There are plenty of rewards to be had besides money. Enjoy every moment of it, sincerely. My financial comments are aimed strictly at the people who DO want to make money from it, but for whatever reason, haven't been valuing themselves properly. There's far too much of that going on in SL, in my opinion.
Now, can everyone in SL hire me? No way. But not everyone in RL can afford to hire people either. Most people in the world are employees, not employers, and most of us are fine with that. We pick and choose who we work for, all of us. There's no reason it should be any different in SL.
I realize some people see working above the average SL consumer's price range as losing business. I would encourage you to let go of that point of view. Consider the following. Most people reading this right now are employees of SOMEWHERE in RL. As an employee, would you agree to go to work for a company who you know doesn't have the money to put in your paycheck at the end of the week? I very much doubt that you would.
Why should the rules be any different for consultants? I have bills just like everyone else, and I need to be paid just like everyone else. The last thing I want to do is waste my valuable time doing work for people who can't afford to pay me what I'm worth. THAT would be losing business. Every hour I spend doing that is an hour I can't spend either working with, or earning the business of, a real client who CAN pay me.
You might be thinking "What happens when someone 'balks', as Briana put it, at the prospect of paying RL rates?" Well, sticker-shock is going to happen from time to time. It's no big deal. My outlook is that if someone's going to freak out because my estimate is a few hundred or a few thousand dollars more than they were expecting, they came to the wrong place. That's on them, not me. My answer to them is always the same: "There are plenty of people in SL who are content to work for micropayments. If you'd like, I could recommend a few. But you came to me because I'm a professional. If you want what I can deliver for you, this is what it costs. Should we keep going, or would you like me to refer you to a hobbyist?" Sometimes they opt for a hobbyist, and sometimes they opt for me. Either way, the right decision is made by both of us.
I should also mention the opposite happens too. I've had plenty of clients come to me after they've gotten burned by already having gone the cheapo route once. Their project doesn't look how they wanted it, and they're not happy about it. I tell them what I can do to fix it, and they tell me I'm a godsend, and that I'm worth every penny.
While I do feel bad whenever I learn that someone has wasted money (and even worse that someone else got away with taking it after doing crappy work), I love those kinds of clients because they're the ones who REALLY understand the value of my services. They've learned with all certainty that you really do get what you pay for. Treat those people well, and they'll stick with you for life.
Remember, the enjoyment they're going to get out of what you're providing them is far more lasting than whatever amount of money they hand you in exchange for delivering it. No matter what the amount, you will have spent it within a few days, a few weeks, or maybe a few months at most. They're going to be enjoying their island far longer than that. Whether you charge a little or a lot, they always get a better deal than you do. So you might as well charge as much as is reasonable for your own time.
One more thing I should probably talk about on the subject of rates is that it's not uncommon for a client to want more than they can afford. That's fine, as long as you handle it properly. Don't drop your price to try to save the deal. That makes you look like a greedy bastard who was just trying to see what you could squeeze out of them. They'll lose all respect for you right then and there, and you'll never get it back.
Instead, guide them into a resolution that will be positive for both of you. Remember, you're the consultant. Consult. They want to do business with you; help them to do it.
Perhaps a phased rollout would be in order. You do the portion of the project that they can afford now, so they have something that works for the time being, even if it's not as grandiose as the whole thing would have been. Then you simply add on over time, as they get more money. Imagine having ten or twenty clients in that situation. All those add-ons could be steady work for you for the next year or two, without even having to fish for new business.
Or, if you're comfortable taking more of a risk, you could offer financing. Deliver the project for a downpayment, and then have the client make monthly payments thereafter, until they've paid the whole thing off. I don't actually do that, but plenty of people do.
Where there's a will, there's almost always a way. If you've got someone who wants to do business with you, the hard part is done. The monetary details are a much smaller hill to climb. You won't always be able to make it work, of course. But often, you can.
I won't name names, but here's a story that illustrates many of the above points. A friend of mine once referred me to a couple of clients who run a large theme-based group in SL, which relates to their RL business. They own an island, which has a successful club on it, and they wanted to expand to include a retail store, some fun & games areas, a better looking club, and replica of one of their RL houses for mixed reality events.
It turned out they had already done the el-cheapo thing, and they were very unhappy after having done it. Their island looked all kinds of terrible. Not only was it seriously one of the ugliest and least functional builds I'd ever seen, but it looked absolutely nothing like the 2-minute description they'd just given me for what they wanted. It was awful. I can't even imagine what that builder was thinking while working on it.
I talked with them a bit further about what they actually wanted, and I took notes on the conversation. Two days later, I sent them a formal proposal, which included drawings of what I would build for them were they to hire me. We set up a date for a conference call for a few days after that, to decide the next step.
It turned out that a lot of what they wanted happened to include items that SL is not very good at doing, like ice sculptures and such. The building and texturing was going to take serious time, in order for it all to be up to my quality standard. So when I calculated my estimate, it came out in the neighborhood of $20,000.
Was sticker-shock in store? Would they faint at all those zeros, and tell me to take a hike? Read on.
On the conference call, they were very upfront in telling me several things. One, they had been shopping around, and had several other proposals in hand from other artists, in addition to mine. Two, there was no way they could afford that $20,000 price tag at that time. Three, my estimate was by far the highest of the lot, almost four times higher, in fact, than the next highest one.
Sounds bad, right? No way I'm getting the job, right? Quit being so defeatist, you!
Actually, it sounded exactly on the right track to me. It was everything I had been expecting they would say, and I knew precisely what was coming next.
Four, my proposal was the ONLY one that perfectly reflected their wants and needs. My drawings of the build were, in their words, "like you pulled them straight out of our heads, exactly what we want, exactly."
You see, the numbers don't lie. I know how long it takes me to do things. If there's $20,000 worth of labor in there, there's $20,000 worth of labor. Any estimate that said otherwise was put together either by someone who didn't know the first thing about what would really be involved here, or by someone who valued themselves so lowly that there would be no way they could be counted on to be consistently professional for the duration. So OF COURSE the client would want me, if THAT was my competition. I would only have had cause to worry if the other estimates were in the same neighborhood as mine. I had nothing to fear from amateurs. I knew it, and so did the client.
But there was still the unfortunate truth that they physically did not have $20,000 to spend, especially after having wasted a couple grand on the previous incarnation of the build. What to do? You guessed it, phased rollout.
We settled on a $6000 portion of the build that they could afford immediately. They would just do without the rest until they could put some more money together.
(That actually turned out to be blessing in disguise for them, by the way, because SL's been evolving in the mean time. With all the improvements to sculpties in recent months, along with some newly developed texturing techniques I picked up, certain things can be done a lot quicker now than before. Consequently, I was able to send them a revised estimate for the remaining work, which was about 20% cheaper than the previous one.)
They've already come back to me twice now for add-ons. Nothing big, just a hundred bucks here, a couple hundred there. But I know the rest is out there. Over the course of probably the next year or so, there's around $10,000 worth of business to be had from these particular clients, if not more. All I need to do is maintain the relationship, which is a heck of a lot easier than establishing it in the first place.
So like I said, charge what your worth, and be matter-of-fact about it. Don't ever be afraid to just say, "This is what it costs." Above all, treat your clients, and yourself, fairly, with dignity, and with respect.
Oh, by the way, don't think every deal I land is for $20,000. My minimum per job is only 2 hours, and my rates are reasonable, well within the standard range for RL digital artists, and toward the lower end of the scale at that. It's not all that expensive to live here in Buffalo, so I don't need to charge as much as people in places like NYC and LA.