"How much they should be charging" now that's what I don't understand. Who's to say how much I "should" be charging?
Sure they need to decide what their cake is worth, that's what I just said: "they never do the math to figure out their materials cost, overhead, labor costs, and profit," as in, they SHOULD be doing the math for themselves and figuring out how much they are actually spending on ingredients, materials, etc., not just say "Oh, I probably spent about $5 for these ingredients, so I'll charge the customer $20 and make $15 profit, cha-ching!"
And you should figure out for yourself how much of an hourly wage you want to get paid, most would recommend at least paying yourself minimum wage, but for the love of cake, PLEASE pay yourself more than minimum wage.
I'm not in any way implying that you or any other baker should just take what I charge for cakes and match it, quite the opposite, actually. The only prices you can't dictate are how much you are paying the grocery store for your ingredients, the specialty shop or website for your cake tools, the electric company for the electricity that runs your oven...catch my drift?? Because they have determined how much they need to charge you, the customer, to make money from that transaction, and you can take it or leave it. Just as your customer can take it or leave it when you quote a price for a cake.
Now, I can't speak to skill level, that's another thing you have to determine for yourself- if you have the skill to make this a business or not. I'm not saying you don't, I have no idea what your cakes are like.