It gets easier too, I've noticed. Once you get paid what you are asking and the customer LOVES the cake your confidence grows and you feel like your prices are justified.
Peruse the grocery stores once in awhile too and really look at what is available for a celebration cake. And those rows of little vanilla cupcakes with the frosting from a 5 gallon bucket and rainbow sprinkles? Gag.
If I didn't make cakes myself I have no idea where I would begin looking for a nice enough cake for my daughter's graduation cake. I want it to be SPECIAL, and I know SPECIAL costs money!
I just need some cheeky wording for the sign that doesn't sound too offensive. After explaining this to people so often I sound like a 45 record that has been played too many times.
"The nearest grocery store is ___ miles that way."
"Custom cakes are like custom cars: expensive and lovingly hand-crafted."
"Custom cakes are like custom cars: expensive and lovingly hand-crafted."
I like this quote. 
I'm going to steal it!
You guys can get one of these at Staples. I loved that commercial where the easy button doesn't work at the designer clothing store.
It actually talks but it has a Staples recording, I've found a site online that shows you how to rerecord your own message, like....
"I'm sorry, you might want to try Walmart"
or
"That doesn't work here"
or
the quote above from Varika
I will be pm'ing some of you for permission to use some of your quotes here on my website.....they are just too good not to!
I am CONSTANTLY being asked why my cakes are the price that they are......I had a former fellow co-worker see me in the grocery store Friday...she wanted to know what my price per slice bday and tiered cakes are now...when I told her, she said , 'Good grief! That seems kind of expensive!' 
Whatever..in the words of the famous ones here on CC,.....................
NEXT! 
my 'EXPENSIVE PRICE' is.......CURRENTLY......$2/slice. It will increase in the fall.....that is when I plan to redo my pricing list. It just simply kills me that they think I am in same program with Walmart, Foodlion and Piggly Wiggly ( the places here that do cakes in the bakery section that they offer.) Mine are not frozen, I have to bake each order individually, HELLO! Here's your sign!
I love the replies I see on here.....you folks are so smart! Great comebacks....great thoughts...GREAT place. 
Another one my dear sweet smart business owner husband uses when some old dude is ranting and raving about how when HE was younger this only cost $XXX, and what in the world are we thinking, charging that much, and he'll "give" us $XXX for it...etc etc and on and on...
DH just smiles and says, "It's OK, Bob...'NO' is not a bad answer."
In other words, "If you can't afford the price, you sure don't have to buy from us. We actually don't NEED your money, and we sure don't want to do business with a jerk like you anyway."
I love how, with a smile you can't get mad at, he simultaneously implies that either
a) they're being a cheapa$$, or
b) they can't afford it, or
c) they're just plain mean
he's my hero...
I think everyone has to be prepared with how to handle hagglers, because haggling is becoming more and more common everywhere. I've shared before how I have a very sweet and gentle friend who even haggles at Gap and is successful.
Today I had a friend tell me how her son, who doesn't have health insurance, negotiated with doctor's and hospitals before the baby was born to get a much lower price and then negotiated with another doctor and hospital when the child needed tubes in his ears.
I think it is perfectly fine to stick to your price. Just don't be offended when people try to "negotiate", because it saves them a bundle of money so many places.
This written by someone who would rather eat rocks than have to haggle.
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