I'm making my full time web dev job into part time freelance work. How do I determine a rate?

If you search AskMefi for "fees", "consulting fee", "freelance charge" or something similar, you'll find lots of old threads about this very subject. $40/hour is very low. Your rate should work out to 2-3 times your old hourly rate + benefits. However, if you're interested in a lengthy explanation of how to calculate your fees, my profile has a link to a post I wrote. (I run a site on consulting, which has several hundred free articles.)

$40/hour is too low. I think a good starting point is your salary divided by $1000, so $65/hour. I remember reading on average that companies spend twice your salary on your total compensation package, so using your math, that works out to $65/hour also. The thing is, you are adding a lot of value by staying. They don't have to pay for your learning curve like they do if they picked up a contractor off the street. Due to this, I'd say $80 minimum. How many years experience do you have?

wow am i glad i asked this. i've been here for a year, only have 2.5 years exp. as a .net developer (i'm 25)

Put an ad on craigslist gigs, asking for your skillset and a rate/time estimate. I think this is a pretty common practice, as I've had it recommended to me many times.

Take your desired annual income, add 25% for taxes. Add 10% for insurance and overhead. Divide by 1000 hours since nobody bills 2000 hours a year. Ask for that.

With 2.5 years experience and given that they don't need to retrain you, I think $80/hour is perfect. Since it's only 10-15 hours/week, I don't think they will balk.

Put an ad on craigslist gigs, asking for your skillset and a rate/time estimate. I think this is a pretty common practice, as I've had it recommended to me many times. Please keep in mind that, in many jurisdictions, this is illegal.

Double the front portion of your salary: 2x65=130/hr. Start there and see how it goes.

A lot depends on your prior experience. 2.5 years can be a drop in the bucket or it can be all you need. If you've already got experience with the product, however, that's 2.5 years more experience than any other contractor off the street. The fact that you're still on good terms helps a lot, too. I'd say $65, but it couldn't hurt to start higher--you might very well get lucky if they decide they'd rather pay for a known quantity (you) than some random Joe Contractor with ten+ years and a handful of certs.