This approach also has a beneficial side-effect. Cheap clients deny the bid. Usually these clients turn out to be the most demanding ones with little understanding of scope or appreciation of your work.
The first time I freelanced I was so paranoid about getting work I took on silly amounts of work for absurdly low amounts of money. I'd also add bits on to 'sweeten the deal' - "I'll also do X and X and X!" etc.
It just ended up depressing me. I'd be working harder than my friends (in their 'real' jobs) for far less cash, with far less respect from the clients.
Now I'll just set a fair price and stick to it. Decent clients seem to respect you for doing it (and understand you have your own overheads) and there's a much more business like approach to the job (unlike the cheaper clients, who I completely agree, end up the most demanding).
Also, feeling much happier and more valued doing the work makes me want to put in much more of an effort.
I think you might have stuck longer to the lower rate + spec work. The idea is to start low and ramp up very very quickly. Infact initially you should try to double your rates, and adjust(A/B test!) your rate according to response rate.
Also i think rate is not a static thing. It depends on how much work is on your plate, or how less. It also depends on the market. So when tomorrow a lot of these startups go belly up and billion dollar valuations runs dry, so might your work. You will have to adapt accordingly.
If you don't have enough work at a particular rate, there's no harm in claiming a lower rate as a few test data points. You can always bill some hours you might not bill on the higher rate. For eg. sometimes i leave off some of the research hours when i'm billing a higher rate, but i bill them when i bid a lower one for whatever reason.
I guess at the time I was worried about what people might say if I asked for too much - or what would happen if I didn't get any work. It's dreadfully hard to rid yourself of that mindset.
But once i had a couple of portfolio pieces, i bid around the top 5% percentile and now usually much higher on these marketplaces. It gets me the right client who're appreciative and i get to focus on them without worrying about the hours*rate all day long.
Edited the post above.
IMHO one's better off spending time building a few simple apps and communicating your worth to the client than go blackhat from the start.
You _never_ want to compete on price. Compete on quality. It's a good idea to eliminate the cheapskates ahead of time.