Jason (can we call you Jason or would still prefer lav?) I've seen lots of people more concerned about price than anything else when it comes to design design. Also with so many free solutions it can be hard to compete. I've done two things over the years. One is to figure out how I can do the same work in less time. My rates have gone up, but because I can work faster I can usually offer lower costs.
Part of how I've done this is by becoming familiar with open source applications like WordPress. After working with WP for awhile I can usually code a theme quicker than developing completely from scratch, especially if I can get clients to pick a theme they like as a model. I may not use that solution for everyone, but it's one way to keep costs down for some.
The other thing I've done is not agreeing to work for less than my rates. If the only thing people are concerned about is price I figure I'm better off finding another client.
If you keep dropping prices you get known as someone who works for less and consequently attract more clients looking to pay less. My business started growing the day I started turning away people who weren't willing to pay me for the value I offered. It was hard at first since I really needed the money, but before long the type of people who contacted me changed.
In combination with that I've looked to improve my skills so I can consistently add more value and offer something other designers can't or don't. I'll keep looking for more ways I can add value while at the same time reducing the time it takes to get a project done.
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