Whatever you think your time is worth. Some guys on here can charge over $150 an hour vs some shops will charge $50. Keep track of your time and bill accordingly.
Some shops have thousands and thousands of dollars in overhead. Some work out of their garage. Ask other shops in your area what their hourly rate is and go from there.

The Texas shops selling on eBay are destroying the upholstery business, lowballing ( example 2009 Chevy truck seat bottom in leather for 60 bucks ) their poor quality products and their products are made in Mexico . Once over the boarder they sew tags saying made in America and title their stores USA this or US that plus they have 8 eBay stores under different names to drive competitors out
Best of luck getting a fair price on what your works worth

A shop cannot compete with the internet, So don't even try! Explain to the customer that they are not comparing Apples to Apples and your shop only uses quality materials. Explain to them that they are not only buying a product or service but they are buying your expertise and experience. You are there to give them a face to go to if they have any problems. We politely explain to them that we only install what we sell because our name goes on the job regardless where it was purchased.

As for hourly rate, Aside from direct expenses for the job. Break down all of your overhead expenses into an hourly rate, be thorough don't forget taxes and insurance. Add in a fair rate for what your time is worth. One of the most neglected expenses are misc materials and supplies, sew foam, thread, glue staples, panel board, etc.. And the most forgotten number is Profit Margin.

I don't try to be competitive with other shops. After 40+ years I know what it takes to keep the doors open and offer a good product. Yes we lose some that are looking for price only and we have seen many shops come and go because they have priced themselves out of business.

Good luck in your venture!