In the US, having something handmade is a treat and usually comes at the higher price range. Here in Ecuador it's not quite the same. There are still the higher-end handmade things made with nicer materials. But you can also find handmade items that aren't unique - they're just handmade because it's hard to find them commercially otherwise or they're much more expensive commercially.
For example, a friend of ours went to a carpenter's workshop with a picture of a table and bench-style seating she wanted in her new home. She may have been able to find something in a store that would have been similar for a much higher price. Instead she chose to go with a local carpenter and have a table custom-made. When we visited with her, she thought the table might be too high and was going to call the same carpenter to come in and saw down the legs for her. And that's normal here.
Labor is cheap here. The minimum wage is $360 a month for people who are employees, not working on their own. That's $1.50 an hour. I'm not sure what the standard hourly wage is for most self-employed people, but have heard that people survive on as low as $1-$2 a day (although they barely do so). But there are a lot of self-employed people here. Movers, painters, house cleaners, delivery services, dog walkers, etc. are all low-paying jobs.
It's a different topic to get into the fact that these workers should be paid a decent living wage so I'm not going to get into it here. But what I've learned from being here is that I can make a small change, but the Ecuadorian society and economy as a whole will have to improve to make long-lasting changes.
My way of dealing with the low prices is not bargaining if I think that the price reflects that marketplace. If I think a price is truly unfair or someone is trying to take advantage of me being a gringa, I simply won't buy the item. That's one nice thing about being a semi-local: you know what the prices of different items should be and when someone is just ripping you off (especially helpful with taxis around here) since not much is labeled with a price in the markets.