I think if you update your photos to give a more professional finish to your product it could increase sales. There is nothing wrong with your prices but you need to be able to justify this to the buyer. High quality items can demand higher prices and photos are a first confirmation of your item's quality.
There's no need to downgrade materials, lower prices etc. Etsy recommends these high prices for a reason; to ensure you are able to get the profit you need to sustain your shop. Whilst many people like bargains, handmade items are viewed differently. You have sales and many admirers which is a validation of your work.
https://www.etsy.com/listing/86210024/victorian-civil-war-taffeta-ball-gown?An example of a listing above which demands a medium price and shows quality. I would've expected this to cost at least $150 dollars more than it does! The use of a model, camera angles and quality make this dress look like it deserves a higher price.
How were you planning on marketing? I asked someone who has been trading for seven years who said they spent thousands on adverts in newspapers and local radio but in the end word of mouth was what brought in the most cash for her. You will have to invest more time but I'm not sure you'll need to invest more money. I'd recommend asking others who sell similar items where else they sell their items and therefore where they pick up most interest.
Annie is right, asking for the REAL price for your work will result in better sales, maybe not as many but I can guarantee more people will trust the quality and value for money if it costs more, and the presentation of your listings are improved. Underpricing leads to problems down the line, if you decide to wholesale most places will want 40-50% off your retail price and I doubt that will be worthwhile for you, low prices also do not make for sustainable businesses. Even if you sell less, you will make much more money from just a few high price sales than loads of underpriced ones
