This has been a debate I've 'internalising in my head' - popular term currently, and have externalised with a few close friends both in the creative industry and in others. One friend who also now happens to be a client said "Dude, your rates are too low. You could be charging a lot more - well, charge others a lot more."
My response was along the lines of "I'm trying to build a business and an extensive portfolio", but a concern is if I price myself too cheaply will that lessen my worth? And how do you work out what you have to charge to break-even or better yet, get ahead? I'd looked at what larger firms were charging but this was confusing, nothing seemed clear cut. I was privy to a conversation recently where the comment was made that a merchant could make twice as much markup on the same service from their outlet in Marlborough as they could in Nelson. This I don't agree with at all. I understand the basics of supply and demand, but this feels a bit shonky."Oh, you're calling on a Blenheim number, so that'll be..."
Call me old fashioned, but I believe in being upfront about my rates. 
Phil (back9design) sent me this link, it's a good tool for working this stuff out. really useful for any freelancers or independent creative types out there.

Computer hardware and software cost a similar price to what my electrician buddies have loaded in their vans and needs updating more frequently than their tools. My camera's worth more than my car and will devalue at a similar rate.  All things to consider when costing your time, but the first priority surely must be  to grow the business, therefore rates have to be attractive but also sustainable.  

Here's a little video I've posted before on facebook but it has a message I like to remind myself of and share with anyone who creates anything themselves. 

And this next video, again from Derek Sivers, pretty well sums up my intentions for Aeon Design. I bought Dereks book a while back which isn't so much a self-help business book, it just him explaining how it worked for him, you can take what you want from it.