Small Business Trends has reprinted an article by Susan Reid--business coach and author of Discovering Your Inner Samurai: The Entrepreneurial Woman's Journey to Business Success--in which she writes that now is the time to drop prices.  This period of early but slow recovery is the right spot because "things are about to take off" for small businesses.  She points to the film Mr. Mom, set in the recession of the early 1980s (Terri Garr and Michael Keaton fans: you'll have to read the full article--link below--to catch the relevance).  And she outlines the right approach with these key pieces of advice:

Create an esprit de corps.
Don’t set yourself apart from your target market. Find a way to connect with them emotionally and show them you are all in the same boat.  Example: We’ve all been through a lot during this recession and have gone through some tough times.
Make sure you use strong wording when lowering your prices.
Don’t be namby-pamby. Let folks know exactly what you are doing in bold, strong language. Example: We’re slashing the price of our services in half!
Be entirely transparent and upfront about why you are lowing your prices.
Don’t let there be a whiff of anything slightly off about your offer. Let people know exactly why you are lowering prices. Example: We know that many of you have wanted to use our services but found our prices were out of your budget.
Be entirely clear in your call to action.
Don’t apologize for asking them to take action. Tell them exactly what you want them to do and why.  Example: Check us out again! We’ve dramatically lowered the price on most of our products.
Tell folks when you will be going back to your regular prices.
Don’t waffle around about when you will return to regular pricing. Tell them what you’ll be doing and when. Example: In six months, when the economic crisis is over, we’ll go back to our regular prices.

Read Begin Your Economic Recovery. Lower Your Prices Now! here.