The prison could, for grift reasons. They can undercut competition because their costs are lower. If a union, or even a market-rate shop needs to pay, say, $20-hour for labor, and the prison can pay $1-hour (or day) they can charge much less, and then pocket the difference. Their advantage isn't a higher quality product just a cheaper one.

Most jobs in prisons and jails pay less than $1/day, last I heard, maybe they got the inflation adjustment the rest of missed though.

Why not charge the same and pocket a larger difference?