Consider the Cadillac theory
You call a Cadillac dealership to get a quote on the newest, top-of-the-line model. The salesman says he can sell you one for $250 if you buy now. Do you?
I doubt it.
Why? The salesman might be a liar trying to trick you into coming down to the showroom to pressure you into another deal. He may have the newest, top-of-the-line model fresh from a train wreck. He may be trying to sell you a stolen car. Or any number of other problems.
Why do we think there are immediately problems? Because the price is too low for the merchandise and its reputation. The same holds true for PJs.
PJs aren't selling a product (a car). We sell our reputation. The high-quality reputation of the Cadillac brand makes buyers expect to pay a premium. The PJ's clients are the same.
Let's look at a typical freelance gig – a wedding. I chose a wedding as an example rather than an editorial gig because it's easier to see the dollar signs. However, this theory applies to all PJ endeavors.
Since most folks planning a wedding are not editors or art directors, they must go on reputation and price. They have already spent $15,000 on wedding preparations and their budget is tight now. They plan on this being their one and only wedding. The wedding PJ must capture the magic of the day.
They call two PJs because they heard PJs are the best at weddings. The first PJ understands their financial crunch and is willing to work out a payment plan, but the cost is still the standard $5,000. The second PJ says s/he'll do it for $250.
Who would this couple hire?
The couple probably hires the expensive PJ because there must be something wrong with the cheap one. They don't want to throw money down a hole and leave it up to a cheap photographer. Cheap doesn't mean "good" to most people.
Expanding a tad more, the cheap PJ may be busy every weekend, but it takes 20 weeks (five months) to catch up to the one week of the expensive PJ. So let's look at the odds. Is it likely the expensive PJ could get 1 in 20 jobs? Sure. Is it also likely the cheaper PJ might miss a high-dollar gig because s/he is already booked? Absolutely. Will the expensive PJ be able to manage more than one gig in five months? Very likely. Will the cheap PJ ever catch up to the high-dollar PJ? Never.
As if it didn't hurt enough for some folks, let's consider one other factor. People getting married are often surrounded by other people who are going to get married in the near future. If the PJ does a good job on the wedding, it's likely other people who participated in the wedding will want to hire the same PJ. It's also likely those people are in the same socio-economic strata as the couple who could afford the premium-priced PJ.
Meanwhile, the cheap PJ is never able to court the expensive weddings because all his contacts know the PJ as cheap and promote this aspect to their friends (no matter how good the images are). The expensive PJ gets referrals because the PJ is "expensive but does an excellent job."
Here's one more secret: people love to say how much they paid for high quality work. If someone paid too little, they would never say how much they paid or who the PJ was. If the price was fair but unattainable to most, the client gladly quotes the price and PJ's name because they want others to know how elite they are to hire this particular PJ.
If some PJs charge too little for their work (and drive down the overall market), they are creating their reputation as "cheap" rather than "good." We'll go into this theory in more detail later, but I wanted folks to consider how their prices relate to their reputations.
Enough for now,