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This is a question that comes up from time to time, and like most such questions, there is no right or wrong answer per se, simply opinions.
This particular question tends to divide people into two schools: those that think you should never compromise on your price when starting out to build a portfolio, and those that think in order to get your first few contracts and set the ball rolling, you should feel free to set the price at whatever you feel comfortable with, with a view to increasing it later.
If your actual 'selling point' is going to be cheap web design - and permanently, not just to get the first few clients - then you will need to do the maths to work out how much money you need based on, say, working 80% of the week, to cover your costs and hopefully turn a modest profit.
If it turns out that it takes you one day to produce a basic website for your target market, and you believe you will ultimately be able to have four websites to create per week once your marketing kicks in, then you need to decide how much money you want to earn per week. If it is £500, then you need to charge at least a minimum of £125 for each of those four one-day-a-week websites to hit your target income. If it is £800, then you need to charge £200 per website to meet your targets. The more/less work you think you will have per week, and the more/less time each job will take, you can use that as a guideline figure to aim towards.
That's one way of working out a potential metric for a cheap website, and it is much better than simply plugging a figure out the air as there is rationale behind it. What price were you thinking of yourself and how did you come to that figure?
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