Find out who is the go-to guy for printing in your area. Charge what he charges, but offer better service, better accessibility, better everything.
Always go the extra mile and a half. Make sure all the hot-dog customers in your area know you by your first name and do not hesitate to call you on Sunday evening because you are the best damned printer for miles around and they believe you are proud of it and they know you will never let them down. That really does work, honest! The best and most successful and most memorable people I have dealt with have all been like that.
If that doesn't pan out, then undercut. That's how real life works. Don't bother with responsible business logic which can only lead you to a life in an occupation unrelated to photography. Keep raising your prices but only until your checks stop bouncing and you can afford to buy food, that's Business 101 for photo professionals.
Or find a poorly served niche market in your area, and serve it very well. But be careful...that will probably wind up being PITA artists looking for the elusive perfect copy or their work. The rest is legend.