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Rates exert gravity. If you charge more, you’ll spend your time talking to more sophisticated clients, working in better businesses, specializing in projects close to the money. These are compounding advantages. If you charge less, similar dynamics apply.
A lot of low-sophistication freelancers get trapped in a cycle where their rates mean that they are hired by bozos, and then stiffed by bozos, because bozo. So they spent their time chasing bozo bucks, not getting better at delivery or pipeline management.
Your community becomes other people whose businesses are constantly on the knife’s edge. If you experience success or threaten to, they will (not necessarily purposefully) try to sabotage you (e.g. by talking down your rates or by introducing clients who you should not talk to).
The discourse in your community becomes toxic about money (hiya, artists). Good operators leave. The local socially acclaimed experts are not good at operating businesses (if they were, they would have exited, almost by definition).
Folks sometimes ask me what to do if they find themselves in a bad market, like undifferentiated web design for local businesses. The right answer is probably “Leave.” Take skill set, add to it, apply to a better market. This rarely gets implemented.
(I think there is an analogous mechanism in product businesses, too, and sometimes wish I had cut my teeth on something a bit more ambitious than the path I actually took, because it would have resulted in learning more, faster, and finding a better peer set faster.)
(“But don’t you need to pay your dues to skill up prior to doing something more ambitious?” I think one of the core realizations one should take from Silicon Valley is that at least some people “paying dues” have an alternative trajectory which learns 100X as much per year.)
(The people you are paying dues to are not necessarily incentivized to tell you of the existence of of faster paths, and this is not always because they’re malicious. They’re probably as enmeshed in the system that produced them as you are.)
And this is why I love the Internet, because it can be both a vector for discovery of better opportunities, a repository of the skills one needs to successfully execute on them, and ample existence proofs (and synthetic pants kicking) that it is possible to be more ambitious.