First, remember that people really have no idea how much a custom cake costs. They're not trying to be insulting, they're probably genuinely surprised that it doesn't cost $18 for a cake to serve 30 people if that's what they've been paying at the grocery store for a sheet cake.
Second, don't start thinking that you need to justify your pricing. Stop posting memes about buying from mom and pop businesses, or why a custom cake costs more than a grocery store cake. And the "good cake isn't cheap" thing is old now too. No matter how much I agree with the sentiment, telling people that they have bad taste because they like Walmart sheet cakes isn't going to win you any customers. It's far more effective to give them a sample of something that's higher quality than that and let them decide for themselves.
But I digress...
Here are the ONLY five steps you should take if someone tells you that you're charging too much.
1. Count to ten and remember they're reacting from the place of their own budget, they're not saying that you're a terrible person who kicks puppies and steals from orphans. They're just leaving off the last part of the sentence..."You're too expensive...for what I can afford."
2. Ask them if they have a budget they're trying to stay within.
3. If they tell you a price range, and you can work with that for something less elaborate, offer them that option. If they refuse to tell you a figure, tell them what your minimum order amount is and that when they figure out their budget they can call you back to talk about design etc.
4. If their price range is way below what you can accommodate, say "I'm sorry, I can't do it for that amount. You might want to call (insert name of budget bakery here). Feel free to call me back if you get some wiggle room on your budget and I can give you some design options that might work.
5. If they reject your suggestions or try to bargain with you, repeat number 4. If they refuse to let you off of the phone, it might be a good time to have to go answer the front door or something like that. Hang up.
Also keep this thoroughly proven by way of many anecdotes fact in mind...People who give you a hard time about pricing from the start, and who complain a lot during the buying process, are far more likely to complain after the fact. It's usually best to turn those jobs down, and to document every detail in writing along the way if you do take the job.
Kara Buntin owns A Cake To Remember LLC, online cake supplies at www.acaketoremember.com and www.acaketoremember.etsy.com