Hiring a writer

If anyone who reads that has ever hired a writer or has thought about, I would like to know how you determine what to offer in payment. Is it based on your budget? Have you researched the market to discover what a writer might charge?

I was looking for freelance work, something I do frequently, and I found a notice for a writer. The pay was a penny and a half per word. I wondered then, as I do many times when I read job postings, how that fee was set.

If you're a professional writer, how do you set your fees? Do you charge based on time spent, or per word published or some other way?