Why I can't afford discounted work

I was working earlier tonight with a lady who's trying to get her freelance career off the ground. She seems to be in the proto-business state, and her main objective is to build a client base. To that end, she was willing to work for half the rate she thought she should charge, something that wouldn't result in a living wage (particularly not with a three year-old involved).

Not to be all goody-two-shoes and conspicuously polish my halo in front of everyone, but I told her that any work she does on my behalf should be at full price. There are purely selfish reasons for that. One of which is my strong opinion that higher billing rates tend to demand leaner, effective processes, simply because each tick of the clock is so much louder at full price. When time costs less, there's less incentive to invest in what ultimately leads to an end-product that's worth the price. Similarly, triaging the non-negotiables vs. the nice-to-haves is sloppier when the lower rate gives you more flexibility in turnaround time. (You know, Fast, cheap, good: Pick two.) So I'd rather people working in a top-billing mentality, because anything else tends (in my experience) to encourage false economies.

To me, the only two choices that make sense are: A.) Charge full price, or B.) Do it for free. The reason for this binary attitude is simple. At the two far ends of the free-vs.full-price spectrum, you know exactly for whom you're working. When you're working for free, you're working for something other than money, which means there are no purse strings--in other words, you're working for yourself. In contrast, when you work at full price, you're working solely for the customer. But neither is 100% true anywhere else in the spectrum.

That's a problem. Maybe the customer won't recognize it as such, but the discount is a powerful incentive to discount the value of your work in your own mind. The cut-price mentality that results does little to nudge you toward ways of working faster and at a consistently higher quality level. Nor does it encourage investing--in the coin(s) of thought, money, or the pain of process change--in the longer-term relationship with the client. Why? Because the work--your fundamental connection with the client--become a means to an end (short-term cash-flow and/or portfolio trophy) rather than an end in itself (the longer-term collaboration).

Obviously, it's her career to develop as she sees fit. But it's not a path I'd willingly trod: The conflict of interest is virtually unavoidable, which doesn't jibe with the ultimate goal of forging partnerships.