> But, why would they would they choose to sell at a loss when they could beat the competition at twice the price?

Because they promised to cut prices by an order of magnitude. Following a promise like that, you can't just offer a 10-15% price reduction.

Plus, if they offered at twice the current price, I don't believe they would be competitive. Part of the reason they offer a low price is that they have still-new, not-fully-tested technology. Clients accept the increased risk, but they expect significant savings in return.

Also, for certain flight configurations, SpaceX's pricing isn't particularly competitive even at its current level.

I don't beleive this, but it's possible that SpaceX are selling launches at below cost to drive demand so that they can get up to a scale where they're economical and in order to establish a dynamic in the industry where known low cost launches enable new projects that will cause higher demand in the future.