Sorry to hear that your year was that tough. Competing with low prices is an issue everywhere as some new companies tend to undercut to get new business.
Try not to get discouraged though *
Usually a cheaper prices comes with a sacrifice of some qualtiy. You have to brainstorm and come up with ways to build value in the services you offer and, as Gopher Team pointed out, perhaps try to add some profitable services that the others don't have. How can you set yourself apart? More attention to detail? Offer a full compliment of services? Exceed the expectations of your customers.
I have found in most areas that there are always people who will take quality over a cheap price. The trick is to build value and exceed expectations.
Have you read Guerrilla Marketing by Jay Conrad Levinson. Great ideas for cost effective marketing. My own book has lots of tips including '10 Ways to Exceed the Expectations of Your Customers'.
Good luck & I hope you give it your all before packing it in