I understand where you're coming from, as I sell handcrafted items myself, on eBay and another site well-known for catering to crafters (not on this ebay ID). Some of my items are relatively quick to make, others take several hours, and - at least on the other site - there are many (many) sellers who do the same craft I do, with prices that are (to me) incredibly low to incredibly high. I'm somewhere in the middle. 
The thing is, though, (I mean, this is just the way I feel about it, because this topic crops up a lot in the circles I'm in, so everything that follows is how I approach the situation, maybe it will help, maybe it won't 
), no one else owes me the benefit of pricing their items the way I feel is appropriate. If someone wants to, for whatever reason, craft an item then sell it to recoup some of their costs rather than make a profit, I literally have nothing to do or say about it, not in the true sense. Some of them just do it because they enjoy the hobby, and want to have some of their costs met so that they can continue to enjoy the hobby.
Some price their items from a buyer's perspective, but as if said buyer has 'inside' knowledge. By which I mean, if you go to a craft show, you'll almost always get at least one person who knows (or assumes) what the ball-park material cost of something is, says to themselves "I could make that for $5, charging $25 (or however much) is ridiculous", and some sellers will approach their items the same way (eg "this only cost $X to make, no buyer is going to pay $Y for it"), which of course discounts many other costs involved in selling (as opposed to crafting), as well as things like years of experience, R&D, and various other aspects that can't truly be priced.
Others just haven't realised the true cost of creating and selling on an ongoing basis - I was actually guilty of these last two approaches at one stage or another, as sometimes my material cost wasn't very high, but I soon realised if my venture was to be viable, I not only had to value my time and skills, but I had to account for what it was really costing me to run the business.
And therein lies the key to my current approach....
I have no interest in comparing myself to other sellers who are making the same kinds of items I am (I soon realised if I did that, then I'm setting myself up for my customers to do it as well). My interest is in distinguishing myself from them, so that the value isn't just focussed on the item. Some buyers might go "this seller has X item for $15, and this seller [i.e. me] has it for $25", but my goal is for people to view my items as different, even if the piece is technically identical to someone else's, and that's achieved via branding (which in turn encompasses a wide range of things, from customer service to names and logos), because - even if I wasn't competing with hobbyists, I'd still be competing with mass-produced cheap stuff and there will always be people who shop on price, you can let those ones go rather than try to convince them to purchase, as they're not your target customer.
