It will eventually happen to everyone...Someone will get in touch with you and say something like "Remember me? I worked with you five years ago and never spoke to you, but I hear that you're making cakes now and I really need one at a great price. So I figured that since we're old friends, you could do me a favor and give me a discount."
What surprises me, though, is how many people feel like they should be giving people they barely know discounts because of some random connection. An acquaintance will call and say that their friend needs a cake and they told them that you could give them a good price. Or the cousin who stole your boyfriend (I love Jerry Springer) sends all of her skanky friends to you and they all expect free cakes.
Here's the simple test. If that person would do a big favor for you (and making someone a custom cake is a big favor) then maybe you can give them a discount if you're feeling happy about it. If they wouldn't do you a favor or give you a discount on their services, though, just say no to free cake.
You also need to stop looking at it as a discount. Think of it as giving away a part of your work for free, and that might make you think twice about it.
Let's say that you tell someone you'll do a cake for 30% off. Don't think of it as earning 30% an hour less, think of it as working for free for that amount of time. So if it takes you ten hours to do that work, you'd be working for free for three of those hours. If the thought of that makes you want to hurt someone, you shouldn't give them the discount.
There are people for whom I wouldn't mind working for free. There are also people who couldn't pay me enough to work for them, so that's a personal decision. But if you wouldn't work for free for someone, you probably shouldn't discount for them.
People will take advantage of you if you let them. So place some value on your own work and don't let them.
Kara Buntin owns A Cake To Remember LLC, gumpaste flowers, silicone molds and cake supplies online at www.acaketoremember.biz and www.acaketoremember.etsy.com