Polly covered this whole topically so thoroughly, I will only chime in on one point. That is orginality of your designs.
I don't know your work at all, so if this does not apply to you, ignore it--but almost every time a budding jewelry designer complains that their work doesn't sell or that their customers complain about the prices, it reflects a lack of something new or fresh about the work. It all too often tends to look like everything else out there.
It's perfectly okay to be aware of what is trendy, and to look to other designers for inspiration and new ideas. But if your work really looks like everything else out there, then it just looks "the same". And when everything looks the same, then it becomes all about the price--which is a bottomless pit, as you said in your post. I've seen sterling silver earrings with semi-precious stones from India priced at Ŭ.95, and there is absolutely no way we can compete with this market based on price or materials alone. It all comes back to design and originality.
We all have to start somewhere, and when I look back, I can see that many of the wonderful designs I first came up with were actually fairly run-of-the-mill. I used the same findings and same beads everyone else had access to. I played it safe with colors (or ran a bit too riotous with color!) I used cheap findings that weren't durable, so sometimes a sale was lost because the clasp broke in a customer's hand while she tried it on. I didn't know how to talk about my work or display it creatively. I tried to make "something for everyone" and ended up making stuff even I wasn't that interested in wearing.
Success came for me when I began to exploit the intrigue of vintage beads, emphasizing their beauty and the elusiveness of reliable sources. And when I began to make my own beads, which became part of a backstory, an imaginery prehistory I creatied.
I started collecting new sources for beads, looking for great shapes, colors and materials rather than just looking for the cheapest beads I could find. I learned how to matte glass beads myself.
I learned to use only high-quality findings, knowing that jewelry buyers often know, appreciate and will pay for good quality sterling silver and either gold-filled or real gold findings (as opposed to base metals and plated findings.)
I became bolder in my designs and color combinations. I began to look for unusual design elements and findings that would add interest to my work. I looked carefully at other jewelry I found compelling, and thought hard about exactly what it was I was responding to.
I'm currently charging four to five times what I originally started out charging for my jewelry, because over time, I established a reputation for unusual, high-quality and original work. And I still feel my work is underpriced for what it is! :^)
As I said, this is generally the issue I see with new designers, so if this isn't you, look at everything else Polly said! :^)
hope this helps,
Luann