All this talk that you will be undercut and driven out of business if you charge high, if that is the case why do the likes of M & S, Sainsburys, BT, British Airways, Rolls Royce, Harrods, Chem Dry and the other many thousands of sucessfull businesses survive and all of them show healthy profits.
Price is a important part of the product, but quality and many other factors are normally more important to your average customer.
I personally charge high, if a customers says they can get it cheaper elsewhere, then they are quite welcome to go there, you might lose some but at the end of the day you will end up with customers who are willing to pay high if the service that they are getting is in their opinion worthwhile.
I also never give discounts to friends, there are customers and it is a business you are running.