Each race has its own factors, and GW does not always place the same weight to the minor stats, like I and Ld, between the races and wizard levels. But in most cases, the method will give a value that exactly matches the GW published value, or deviates from the published value by only a few points due to variations in the evaluation of the I and Ld stats. The base point value of a wizard is based on the value of common trooper, and is then increased by the point value of the improved states. For each point increase in W and A, add 4 points to the base cost. The wizards of most races have stat increases in the same abilities.
Skaven wizards are an exception, as are necromancers.
Again, it is a good idea, if you want your army to be balanced with the other Warhammer armies, to increase your wizard's stats in line with the typical Warhammer wizard. There is no hard and fast rule for determining the factor that increases the base cost. Someone suggested a sliding scale based upon the base cost of the wizards as computed in step 1, but GW has made exceptions for some races. But in all cases, the factor is some multiple of 0.5. Here is the table of factors for a variety of races.