Dig it!
I have done the flat rate thing a bit, but nowadays I charge a MINIMUM day rate plus additional costs. It's really just an expensive hobby, but setting prices at a point where I feel like doing this is worth my time has kept clients I don't want to work with out of here. If there's a band I really want to work with, I'll totally cut them a deal.
I'm actually working on a flat rate project now, but it's one dude doing everything and I REALLY dig it, so it's worth it to me even though I'm not exactly profiting at this point...