My "business" (I have not officially hung a shingle, nor will I ever) is all word of mouth. One of the conditions I place on my clients even before ordering is that if they recommend me to anyone, they must tell the individual that I charge more than the local markets including Walmart. My price reflects a quality product in both taste and technique and, when they call on me do to their cake, they can rest assured the time I will invest in their order will be well worth spending a few extra $$.
Then when I get that call saying, "I got your name from _____ ..." I preface that call with, "I presume the reason you are calling me is bc you desire a truely special cake..." I always give them an out by saying the local businesses make 'good' cakes (stretching the truth) but if they want the cake to make a statement, then I would be happy to be in their service. Once that is understood, I then place that same condition on the new client regarding giving my name out to anyone.
I have found that this virtually eliminates the 'sticker price' shock and I have only had one potential client turn me down upon hearing the price.
Oh, one more thing, when I am doing a cake for a friend or when I am testing a new technique and I charge less for the product, I will instruct the client to tell any individual how much I would charge not how much I actually charged. The client doesn't have to lie. They just have to say, "She charges ______ for a cake like this."
Just my 2 cents worth... no, scratch that, make it 4cents.