Figuring Rates

The normal way to charge time is hourly.

It sounds like you are being asked to bid a specific job. So what you need to do is estimate how long it would take you accomplish the job. This ability to estimate accurately requires that you: a)Havea thorough understanding of exactly what you are being asked to do; and b) Have a thourough understanding of the processes needed to accomplish the job. You cannot simply tell a customer you charge $XX/hour or /day. They will want to know how longit will take.

You could charge them per user account and per server, but must still have some basis for what you decide to charge (i.e. XX amount of time at $XX/time unit).

You need to approach this as a business deal (with a contract) as opposed to "Hey, we'll give you a few dollars if you do us a favor!" Also realize that if you accept this, guess who the school will come too if they have problems.

A good question and quite the problem. I'd start with the hard sell, "I generaly charge $120.00/hr, understanding that you are a school with limited resources (sure they are) I'll provide you with a 40% discount (or whatever you choose) and only invoice (NEVER say "bill")at $72.00/hr, OKAY?" (closed ended question to get single yay or nay answer).
If not, try something like, "I normally charge $XX.XX but seeing as this is an educational program and you have a working relationship with my wife, I could provide service for only $XX.XX, fair enough?"

If you are confident of your skills in this situation, go for the hourly or approximate how many hours and give them a fixed price, just be sure to allow for problems if quoting a fixed price.