Don't go too low with your pricing. You still have to make money and stay in business.
If the customers don't want to pay it, then they won't. You want to attract the kind of customers that are willing to pay for the type of work that you do.
You should also consider outsourcing so you keep those customers that come to you for larger jobs where you might be priced out of their range.
You have a heat press, if you order some
plastisol transfers of the customers design, you can compete better with the screen printers pricing.
You can read some more great information and recommendations on how to do pricing here:
http://www.t-shirtforums.com/tags/pricing/