You could go a few ways:
CHarge her per hour. Know your hourly wage and how long it will take you.
Calculate out how much you would charge to do the whole job, then subtract out the ingredients for the cakes themselves and whatever your time to bake them would be.
We just posed this question to some friends who also bake and here's a summary of what they said using our dollar amounts:
1. We charge $3.00/slice for cake.
2. Cupcakes are larger & use more buttercream than a slice of cake.
So, given that rational, we were figuring on charging $3.50 per cupcake for just buttercream.
Our suggestion would be $4.00 per cupcake since you're doing more work and using more material.
Paul & Peter
This falls under the same poor assumption that decorating a dummy cake is cheaper than a real one. You still have to put in the time and work to decorate them, and as we all know, decorating tiny things is more labor intensive than decorating a large cake.
But, more importantly, my rule #1: NEVER decorate anything someone else baked. It's your name and reputation on the line, and if her cupcakes suck, then your good name has gone right out the window. Sometimes you just have to say to a customer, this is my price, take it or leave it (obviously said in a more polite and professional way lol). If she can't afford those cupcakes, she should either (1) Decorate her own or (2) Opt for something within her budget.
Had to re-read your post after Pink Ziab's post...I misread the part where the bride is doing the baking...
I agree with Pink...Either you do it or she does it.
Paul (& Peter)
Wow! I'm totally flattered and blushing!
When you say she's on a budget, did she give you one? I probably wouldn't decorate something someone else baked either (unless it was for a friend). That being said, if you decide to go ahead I would charge a minimum of $2.00 each. The decorating is more labor intensive than the baking for me, as I seem to bake a zillion cupcakes a week. HTH