I just saw a post in LinkedIn about bad prices when you do freelancing on websites. Granted, you won’t get rich by doing that but 500 bucks for a simple CMS site is not so bad, I’m sure you get it done in a day if the site is something along these lines:
http://www.asiafinland.com/
http://www.english-vietnamese-translation.com/
http://www.vanphongphamth.com/
http://www.duhocphanlan.info/
http://www.friends4charity.net/
You can also make extra money by providing the hosting in the same package. Granted, cheap-ass hosting doesn’t make you much profit but you can easily host 20 low-traffic websites with 20 bucks/mo VPS, and charge customer 3 bucks per month and still appear very cheap.
The problem I see with web sites is that sales effort is too big. Those are simply too small projects to make almost any effort to get a deal. So what I do is that I pitch only for bigger and longer projects (currently I’m developing a micro-loan payment system), and do some small websites when some friend of a friend happens to want one. It’s fun to draw those logos anyway every now and then.
Also, you can take a risk with customer, get % of the company and offer cheaper price and longer term commitment against bigger profits in future. Of course that only works with start-ups, bigger projects and people who you know beforehand.