Fair Price

I am looking for input today as I think outloud...
I make a good quality tutu. My colors are vibrant and I care about what I do. My tutus are every little girls dream come true. And they are affordable.
I have wondered how in the world some sellers can price their item so low. Could it be that they get their materials for cheaper? Probably. But that means that the quality probably isn't as good. So, how do I compete? Do I just hope that someone will want quality over the other stuff?
Or could it be that they are not being paid for their labor? Yeah, I can charge $10 bucks over my material cost. But that means I'm averaging $5 an hour. I'm worth more than that.
You are worth more than that. My product is worth more than that.
So how do you price fair while being paid what your worth? I want this to be worth my time and effort. But I also want to make a sale.
Any thoughts?