you charge what you seem fit, dont let others influence you in your pricing. besides in a community center your not suppose to charge a lot.
your running a business dont let other martial arts schools ruin your business
$35/week adds up to $140/month, which is actually a bit higher than I would expect, even in San Diego. I don't think it would be smart to raise your prices.
That said, you should never dictate what you charge based on what someone tells you to charge. Especially when that person is a direct "competitor." That person has only their interests in mind, not yours. You have no responsibility to the health of this person's business.
Also, if you are, in fact, "taking" his students, it's because he is either a bad instructor, or is over-charging his students. Most likely both (students will stay with a good instructor even if it comes with a high cost). And if he's charging more than $140/month, he probably is over-charging.
If he keeps bothering you, I would recommend to him that he lower his prices to better compete with you.
Becareful the Navy Seals teach deadly martial arts recos.
You shouldn't feel obligated to increase your prices just to please this guy.
I was approached by someone the other day who asked me to charge more for my classes (I do it for fun in a community center and have a job for my needs) as he felt I was "taking" his students. Currently I charge $35 a week for 3 days a week (students wanted that to get rid of those not serious) so was wondering if anyone could tell me what a 3 day hour and half class goes for. I don't have testing fees or any other charge either. you buy your gi on-line