I have experience in web application development and am looking to get into freelancing and consultancy(I'm currently a full-time employee as a software developer). How do I compete with individuals who market themselves overseas at impossible rates for living in first world countries? (~$7/hr)
Simply put, we don't. Just exclude ourselves from that market by setting a much higher rate, and work for those for who money is not the object. This is in a way good, because they tend to be 'consumer' clients and market is easier made in that segment.
Keep in mind that clients who pay low rates are not necessarily the best clients to work with, or ones you'd want to work for in the long run.<p>With that said, there are some niche freelance marketplaces you can consider using, but whether or not you can be a freelancer on those types of platforms depend on your skills as a developer. If your ability is not there yet, I'd recommend on working on that first to help build out your portfolio.