I do agree with Michele about the "if it's expensive, then it must be worth having" syndrome in people.
However, your prices definately need to reflect the area where you live and your experience in the market. I have found in the Colorado market, for example, that a lower cost alternative (charcoal portraits) brings in middle income people and really helps me supplement my income.
I just raised my prices which are still quite low when compared to national standards, but that is what the Denver market will currently bear. I did not, however, raise the prices on my charcoals overall - I still want that lower cost entree' into my work.
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