Wow.. some skewed information in here all around. Not that mine is going to necessarily be any better but as a working professional photographer I can tell you a few things about people who are accepting $200 jobs (as an allegory).
You will never, ever cease to have a flow of businesses who can do something for a little less money and save just a little bit on expenses. The real question is who are you going to market to. Professional photographers who are complaining that Joe Schmo is taking their business at $200 is either marketing to the wrong people or not giving a compelling reason to his client to pay more (i.e. - unique work). Arguments like this never go anywhere because you are trying to compare an art form on an even basis, which will never happen.
Lets say both you and I are selling widgets.
You sell your widget at a bargain basement price of $1. Your manufacturing, shipping, storage and materials costs = .90 cents per widget. Your profit margin is 10% and business is great. You can offer such a great deal because of low overhead and costs.
I sell a slightly better widget but have also got great packaging, a 24 hour widget help line, offer decorator colors for your widget and details instructions on how to use your widget. My materials cost is double your simply because of all of this @ $1.80. My sell price is $5 leaving a profit margin of around 66% or so. My business is average but my client satisfaction is high, repeat business is awesome and even though I sell half as many as you do, I have a stronger business model with more room to improve, diversify and take chances.
There are markets for both widgets and we see this type of thing everyday. Cars are cars, they offer the same functionality but some people want the finer things in life and, in the US, PRICE WILL HELP DETERMINE VALUE. If my widget and your widget on side by side on the shelf, a customer will ask themselves why is mine more expensive. Of course, its a better quality product and guarantees you a great experience. What percentage of people will buy the widget that is more expensive because of these reasons? Studies say 50%... yes, HALF the market will make a judgement call on price alone. We are not a commodity and what I offer my client is unique and irreplacable. It goes the same for every person reading this... we all have our own unique vision and when you commodotize that, then you, really, only hurt yourself. $200 wedding photographers do not bother me. Their clients are not my clients. It is also not a viable business model and, as we have already seen, as the business cannot survive, they make a stronger case for hiring someone who is prices appropriately.
So what I am really saying here is that if you cannot offer a unique product, then you are selling a commodity and you will, almost guaranteed, suffer in the price war when someone offers $195 photography. Then somone lowers the bar and offers it for $150. I saw a CL ad offering to PAY the bride & groom to get wedding experience. If he found clients, they are not mine to begin with.. however, they may have been looking at the $200 photographer and that did cost them business. If you treat your work as a commodity, you must then prepare for those price wars to impact you... as I said, no shortage of people willing to do it a little cheaper for less money.
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