In my experience as a freelancer, the only time to charge lower fees than the competition is if you want to get bruised and hurt and abused by your client.
This is not a function of the clients WANTING to abuse you. It’s a function of perceived and actual value.
In my business (I’m an industrial theatre practitioner and facilitator) the client generally wants to know that he or she is in safe hands. There are huge repurcussions to getting an intervention wrong. I find that they will happily pay a premium price to get a brilliant intervention.
I’m more expensive than the other people around doing what I do. But I generally get called first for gigs. I believe this is for three reasons: (1) I know my stuff. (2) I deliver. (3) I’m more expensive, and am partly perceived to be higher value.
(Being more expensive is a pre-screening tool to ensure that I don’t attract loser-clients. Those who can afford to pay my price are people who have the necessary resources to successfully implement what I come up with. The reverse doesn’t ALWAYS hold. For instance, there are NGOs who have limited resources, who are NOT losers in the slightest. However, with paying clients who are in the business of making money, price should be a non-issue. Value should be the determining factor. (And value is NOT a price issue. It’s about measuring the deliverables and the outcome of achieving those deliverables.)