Never ever compete on price. That's rule number one in the consulting industry. If there's a group of people racing to the bottom on price, then by definition they're not your competition.
"We offer... consulting services at rates that are much less than you might find from other US based software firms"
You'll notice that nowhere do I say we're prepared to compete against teams of highschool kids in Bangladesh on price.
I still like to think I'm competing on quality rather than price. The fact that I bill less for my time when I've got sand between my toes is frankly a bit of a gimmick. Some clients see it as a positive that they're contributing to my suntan.
Shit breaks when something's poorly coded, and has to be fixed (though, the DailyWTF would suggest otherwise). Whereas most people don't care if something's poorly designed and feel that a designer isn't necessary to just get it out there. Designers are fretting about losing mid/small-sized clients to stock templates, much in the same way that most businesses pre-DTP would buy stock letterhead and forms.
It's irrational, but when all of the clients talk about getting rid of the prissy designer one gets jumpy.