I charge a healthy rate considering the difficulty of my work, and it is less strict on my performance. Meaning, if I don't provide a perfect product every time, it's okay, because the client is paying a competitive rate, but if I do well, as I strive for with every project, they know the option to pay for the delivered excellence is there.
You'd be surprised how many clients spring for keeping their designer happy in return for promise of future results.
Regarding the arrogance, I think having a healthy dose of self-confidence is an asset to your career. It lets you realize you can say no to a client, turn a bad client down, and it creates a certain level of mutual respect I find a lot of designers oft complain about not having.
There is a large difference between arrogance and self-confidence. Arrogance is asserting, confidence is suggesting.