This problem of many guys are offering "professional" websites for almost nothing already happened some time behind here, in Brazil. Many serious companies gone away. It was the why to my company prioritize the webhosting service. But, i think will always exist companies looking for really professional service. I think, also, this same companies have chose this bad services will return to change their web presence so that it can be a nice service to their customers and lucrative for their.
Me understand. You have been undermined by "CHEAP" website designers, throwing their wares around with the utmost abandon. Because of this you have concentrated on providing the "WEBHOSTING" only, but you feel there is still provision for a "PROFESSIONAL" Web design service which "MAY" be lucrative?
There is always a place for companies providing "professional" services. Web Site design suffers from the same problems as hosting in that it's pretty easy for anyone to start a design business. It's also true that it's just as hard to be any good at it.
There are tons of free HTML editors around and everyone and their granny thinks that since they can create a basic site they can start a web design business. Unfortunately a lot of them aren't any good at it.
Since I work as a developer I know HTML like the back of my hand and have a good handle of Fireworks and Photoshop, but it doesn't make me a designer - not by a long shot. Sure, I can create a basic web page, and if someone gives me a design and asks me to copy it I probably wouldn't have that much difficulty doing it. But, when it comes to creating something from scratch that is well designed, that is a different story altogether.
We live in the sticks - nearest village shop 6 miles, nearest bus stop 6 miles, nearest neighbour 1 mile - but within a 12 mile radius of our house there are 9 web design companies. There is only one of them that I would consider any good (personal opinion) but they are always busy and charge a small fortune. All of the others are small businesses where web design seems to be something they have latched onto, most of them struggle for business, and all of them are relatively inexpensive. I wouldn't use any of this bunch because I could definately do a better job myself.
Maybe the evidence is anecdotal, but we also work for a number of large design houses where we are, effectively, their development department. They are busy, they keep us busy, and the prices they charge would make your eyes water, but their end product is extremely professional. They get "quiet" periods when they only have 5 or 6 sites at £20,000 under development at any one time. When they are busy this can easily triple to around 15 site with budgets up to £80,000.
So, to cut a long story short, there is always a place for professional companies providing a professional product. It depends on targetting your client market and producing the goods.