Cost is something that I could go on for days about. I've already discussed the reason why custom cakes are so expensive. In a perfect world, custom cakes would all be priced the same way, and all bakers would have the same amount of experience to justify charging the same amount.
In reality, all decorators are different, all ingredients are of different quality and cost, and all techniques aren't the same. Thus the variations in pricing. One thing that all decorators should have? A minimum cost for all cakes.
Whether your minimum is $50 or $200, SET A MINIMUM PRICE!
Even if you charge $5 per serving, and someone asks for a five-serving cake, charging $25 wouldn't be enough to compensate you for your time and energy, your utilities, and ingredients for that cake. It may only be a 5" or 6" cake, but if you're a perfectionist, like I know many artists are, you'll take as much time decorating that tiny cake as you would a three-tier cake. At $25, it's not even worth turning your stove on.
It may be counter-intuitive, but if your work is up to par, your customers will pay your minimum price for an amazing cake, no matter how small.