Hey Kelley, yeah I told her that is too small to carve so she'd probably have to start with at least an 8" square for me to work with. . . not much cake in the end but there would be other work involved with the tiara and fondant, etc. . . not sure what to tell her 
For carved cakes, I charge based on the amount of cake that has to get baked, not the end serving amount...so if I have to use an 8" square cake, then I'm charging for 20 servings...I figure just because they don't eat it doesn't mean it didn't get baked to create their cake! Hope that helps!
How much would you estimate the ingredients would cost you? How long do you think it will take to complete (including baking, carving, decorating, and cleanup)? How much annual overhead do you have (insurance, inspection fees, etc) and about how many orders do you have per year?
Answering these questions will help determine your cost, which will in turn give you the price.
Smallest single cake I will bake is 24 servings.
Remember they pay for how much the cake would serve, not how many they plan to feed.
For me I'd start with a two layer 8in square cake which serves 32. So on the low end of pricing, it would be atleast $128 for me, that includes the fondant, but not the tiara.
I don't believe NJ has a cottage food law, so unless this customer is family or a close friend I would avoid accepting any money for the order if you don't have a licensed and inspected commercial kitchen.
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