Hi Wayne,
I had a very similar experience the week I launched. In fact it was my first ever call! (barring family & friends). It was for a carpet clean on 2 x bedrooms, the upper landing, and the stairs (so the upstairs of a small/mid sized terraced home). I quoted £65 which I thought was fair as I was offering a thorough service not 'splash & dash'.
The guy said there was a company in the local free rag doing £10 for any carpet area and that he'd called and they'd do the work for £40 (£10 an area).
I never got the business and I spent all weekend wondering if I should have gone cheaper. The next week I saw that ad in the rag and I realised I knew the guy - he was the total knacker, trouble maker from school and I happened to know that he was turning up for business in a 16 year old rust covered Escort Estate, and was using a really old battered Extracta (I'm talking about 15 years old, before they even went to the BX, CX, DX etc range).
I was very glad I stuck to my prices - if you charge fair prices (rather than under-valued prices) it simply means you'll filter out a lot of the crap work, often in dirty houses, on not-nice areas, and you'll get better work and earn more money.
Stick with it Wayne - £70 is exactly what I charge for a 3 pc suite - it's a fair price and I'd never go lower than that.
Cheers,
Dave