I've never used elance - but I did use GetAFreelancer.com a bit when I was first getting started; and scored a number of projects as well as one long term client there.
The main problem I see with these freelance bidding sites is you're not only competing against a TON of people for each project but many of them are in places where the cost of living is nil - so their requested rate is absolutely tiny (hence the request you saw for $4 per)

If you're willing to cut your rate down a bit in order to compete it can be a good place to start but isn't something I'd ever expect to use long term. As soon as I got tired of working for peanuts, and had even ONE properly paying client, I stopped using GAF altogether.

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