You’ve gotten good advice on how to set your rates, but here’s a different perspective.
I think we suppliers have tended to look at this issue too moralistically, and too much from our own point of view, and so we say, “It isn’t FAIR that craigslist is helping undercut our bids.” The reality is that there are many different markets out there, each with its own level of compensation. The same amount of effort can be rewarded well or poorly, even by the same client.
Personally speaking, I work in two markets: for non-profits and corporations. The compensation scales are radically different, but it suits me.
Between you and the economy, you’ll find out what market you are in. It’s just like applying for a job: if you aren’t able to persuade a potential employer that you are qualified for a $100K job, you may have to look for a $15K job. But if you never APPLY for that great job (i.e. demand a nice respectful rate for your efforts) you’ll never know whether you could have gotten it or not.
Enjoy the ride.
— Bob C