I have a mixture. I am Personal Chef, and so own my own business. This means I do get to spend more time at home, but some of that is doing "business" related stuff like advertising, budgeting, accounting, menu planning, etc., etc., etc. I cook directly 1-3 days a week, and about 3 hours a day several days a week doing the rest of the business stuff (visiting farms, talking to contacts, web managment, menus, etc.)
When I quite the 9-5, we figured out what I had to make to equal the same lifestyle my paycheck helped us keep. DH works a good job, and goes to school, so we have 1 steady paycheck. We sat down and crunched the numbers, and figured out I could take a $6000 cut per year just for gas. I would be paying $100/wk for gas (living in our area is substantially cheaper than other areas, but 9-5 jobs you have to travel for, which is why it's cheaper. It is enough cheaper to justify it, though). That's about $5,200/gas a year. Now, I'd have to earn about $6,000, because gas is post-tax. So, working from home and doing very minimal driving is alraedy a huge savings. Then, we estimated food savings (I can stay home and do more frugal things, etc), clothing savings (I had to wear business appropriate, which is pricey, and now I get to wear ugly pants and a chef's jacket), and other miscellaneous expenses such as auto upkeep. Bare minimum, I could take almost $10k as a paycut. Now, keep in mind I was not making a super duper salary. I was making $32,000/year becore taxes, which in VA are pretty substantial.
So, essentially, I could make $22,000 and still be maintaining the same lifestyle. I am actually making more than that, so it's as if I got a raise even though I work less. And, we certainly live better overall because one of us is home to take care of some things we simply did not have time for before. Since I like doing these things, this isn't a hardship.
This is not an option for everyone, obviously, but it works well for us.
"This isn't life in the fast lane, it's life in oncomming traffic." -Terry Pratchett