Also, I think there is a lot of focus on pricing (fair, it was the point of the article). But you simply need to back it up with what is your differentiator. It's just like any product: you need to be articulate as to why you cost your rate, and also have an idea of the value of your work to customers (different customers value the same work differently).
So, know what makes you different, find the customers that value that work more, and set your price according to that.
In my experience, differentiating from competition wasn't really a factor in how much I charged or how much I made. For a lot of businesses that would hire a solo consultant, there is no consideration of the competition.
Most of the businesses that I've dealt with are intimately familiar with the problem/objective, but really don't have much knowledge of what is required to get there. This is where the consulting part comes into play. Many times it's been as simple as "let's talk about what you're trying to accomplish here" and from that I am able to formulate a solution in my mind of how that can be solved with custom software (or in some cases, an out of the box tool). I make the recommendation, and boom, a sale is made.
This is where making the business case for what the client stands to make comes into play and why what another developer might charge is highly irrelevant. If you can convince a business owner that he'll make $100,000 with your solution, convincing him to pay you $30,000 is not too difficult, regardless of whether he could technically find a high-school student who would do it for $15/hour.
To me, the key word is trust. Once you prove that you have good ideas and know how to execute on them, making sales is really more about just repeating the process than undercutting the competition. It goes without saying that you must deliver, though.
I am currently struggling with a method to raise my rate with a current client and your comment has crystallized the problem I've been having in writing the email, but not the way you think.
Another way of differentiation is to take stock of what you provide over and above basic work. That is, not to differentiate from any perceived competitors, but from what the client thinks you're doing (their perception of your role to them). If they think you're just doing web development, but also rely on or defer to you for system administration, UX/design, content, and/or hosting decisions, et al, those are all things that comprise your value. This is a roundabout of repeating tptacek's elements-of-value lists linked elsewhere in these threads.
So, know what makes you different, find the customers that value that work more, and set your price according to that.