I instructed in two totally different areas of the country and therefore had two totally different kinds of students and therefore different kinds of bosses.
Area one was a major metro area where the students were older and had established careers and the money that went along with their careers. They were mostly doing flying as a hobby. We usually scheduled for 2 hour blocks. The Chief Instructor would bust our balls if the ground + flight time came to less than 1.8 or 1.7 (1.4 flight should have .3-.6 ground added to it) Hes theory was two fold. 1. We are professionals and so are the students. The students have an established life and understand and even want to pay for the services rendered. 2. If we are doing less than 1.7 or 1.8 hours of work in that 2 hour block then we are wasting too much time or not providing a good service to the student.
Area two as a smaller city, but one that had a huge aviation community. Most of the students here were young college aged kids like myself. Unlike the big city most of the students here wanted to make a career out of flying. Also here most of my students were also considered friends of mine. I still charged for ground on each lesson, but I would probably under charge by .1 or .2 my theory behind it was that these students were just like me and didn't have the extra money and I felt it benefited both myself and student if their money got them more time in the plane.
So I guess I'm saying it kind of depends on your particular situation. I'm not saying that you should always undercharge, just do what you think is the most appropriate or fair for each particular situation. There were times where I traded instruction for things other than money..food, help move, rides in gliders, etc.