" It doesn't cost you anything extra to use a different flavor in the same pricing tier" Huh....you must not have understood me. There is a HUGE difference in my costs to bake a vanilla cake verses a carrot cake. All butter cream is way cheaper then fresh raspberries for a filling, etc...
Which is why vanilla cake and BC would be in a lower priced tier than carrot cake and fresh fruit. But, for example, if a cake was offered with vanilla BC and a customer wanted to substitute chocolate BC (assuming both cost the same) it wouldn't cost you anything extra to make that substitution.
If they can upgrade to a premium filling options without also having to pick a premium design, that makes more sense to me.
I think we are basically saying the same thing, your description seemed to imply that a design upgrade was required if a customer wanted a flavor upgrade.