If crawdad is so experienced why did he underbid? Sounds not to experienced to me. Plus if you have only owned a lawn service for a year it doesn't mean you do not have business experience.
Crawdad didn't explain everything in his original post, Splicer just gave his opinion on what he would do. I do not agree with him though, if you keep doing it the first year, the second year you could lose it, or if they do go for the increase now you are mowing for two years at no profit (2nd year just breaks even with loss in first year)
Crawdad if you already knew the answer why did you ask? I think I know why, cause you are an ________!
So the answer should be #4, keep at the higher rate that you told the client about originally, but you did not give that as an option!