A lower hourly rate does not always mean you will spend less.
The competence and efficiency of the engineer is vital. Mistakes or simple slowness due to inexperience can eat up a lot of time. Same goes for the facility.

The space and gear should be adequate for your needs.
If, for example, if there's not enough space, mics, or tracks for your band to track more or less together, you could spend a lot of extra time overdubbing. That said, a roomful of expensive gear you won't really use isn't always worth paying more for.

You should feel confident from the start that you will be happy with the quality of your project when you are through.
Having to redo parts, songs or whole projects because something just didn't come out right is expensive, not to mention frustrating. The key is talking to people. Go to the studio and meet with the engineer you would work with. Discuss the details of your project, your timetable, and your budget. Have him or her play you samples of music they have engineered, particularly samples from the same general category as yours. Ask how he or she would approach the setup and process of tracking for you or your band. If you like, bring samples of records you like the sound of to give the engineer an idea of where you are at. Make sure he or she is knowledgable and professional, and make sure you feel this is someone you can work with. It's a very close working relationship you are entering into when you start recording.

Ask for references or just ask around. Musicians will usually give very candid answers about their recording experience.