Rhys, I started out cheap, though nowhere near as cheap as you and didn't get very far. I even advertised myself as Budget Photography. After a few people banged my head against the wall I started again under a new name, under a new brand and with prices which though cheap for what they gave, still were more than competitive with my competitors in town. One of them, the guy I had learned under and apprenticed with before starting, gave up his wedding business and gave me his client list. I am now in the fortunate position of turning away more work that I can accept.
I live in Jerusalem but still work in the UK, I commute to work and come home for the weekend. Sounds tough but as wedding work is seasonal I get about 6 months a year at home. People ask me why I don't work out here. I'll tell you why. The market is saturated with photographers shooting and burning for a price which makes no economic sense. Seriously, their prices are not enough to pay for the investment, depreciation and insurance of their gear. The way they make money is by shooting a huge amount of weddings, one a day and provide mediocre quality. As such they burn out very fast.
You have to look at wedding photography as a purely business venture. Your equipment costs X, the equipment loses X in depreciation each month, your insurance costs X a month. Add to that your past spending in learning your photography until you got to the stage that you are at now. Your computer equipment and software all cost money and every second of time you spend at that computer is worth money. Advertising is an expense. Taxes, the cost of a bigger car than you would otherwise have needed to carry the equipment, the cost of having backup equipment that depreciates while sitting there never being used, etc, etc. A business phone line, the list just goes on and none of the above is in any way thought of by people considering prices similar to the ones you are.
I was earning good money for 3 years before I had paid off all my debts and equipment investment and a year after till I was doing any more than just meeting my bills. That was after having spent a year apprenticing so that my face was known in the community and I had a boss sending me jobs he was too busy to do, i.e. with an established pro's recommendation. I am now just making enough to put aside a bit and my prices cannot go further up for another 5 years or so.
When you consider the above you realise that you are losing money hand over fist. Yes you may be getting money at the end of the day but you paid for that equipment, that learning, those expenses out of your pocket (possibly with the excuse that it was your hobby) and that means that the notes held in your hand are a lie.
Let me give you an example. I'm about to do rennovations to my flat here in Jerusalem possibly preparatory to selling it. I'm going to change the flooring and piping, redo the electrics from scratch and install air conditioning. All this I'm paying for with cash, money I made in the last season. If I sell the flat I will get X amount of money. With the rennovations I'll probably get the money I spent back but no more. When I sell the flat and have that bit of extra cash in my hand I could say, wow, I've made profit, my bank account is bigger by X due to my work. I now have X more money to spend on something nice. But it's a lie, I had to spend the money to get it back. Yes I had it to spend but what I recieve back isn't profit.
You could successfully argue that you are taking so little money, or losing money to gain the experience. That isn't business though, it's investment in education and the return will, can, only come when you start making real money.
My advice would be to apprentice with a known photographer until you have the experience and portfolio to start properly and at real prices. You will get paid for your work, you get to use anothers equipment and are in essence gaining all that you would be doing by lowballing, but without losing money. It's a far cheaper and more intelligent way of getting the education.