Why would you sell for less than the market price? If I can sell something at $10/sq ft and my costs to produce it are $5 and my competitors are $9 then there is no reason to cut prices. We will both profit, I will just make larger profits.
Because if you cut prices, you'll get a larger share of the market. So even if you make less profit per unit, you make a larger profit overall. Also, as you scale, some costs stay fixed, so your costs per unit might go down as well.
The catch is that if you charge less than a small difference to your next closest competitor people will think something is wrong with it. Saw it happen many times working at an antique store for years. It was amazing how often raising prices made things sell that had been sitting there for months, or longer. You rarely want to make something too inexpensive, along with never using the word "cheap". There's also issues with trying to give something away for free. Generally people value something more depending on what they paid for it. Upscale brands like Coach and Channel exploit that aspect of consumer psychology.
