Let me just say right off the bat that dummy cakes are pretty expensive, so the cost of the fake tier is going to be comparable to the cost of ingredients for a real tier. The only real savings that the baker will see is in the time that it takes to bake the cake. It still takes the same time to ice and decorate the fake as it does to do the real cake.
There are a few ways that you can incorporate a fake cake into your reception, and which you would use would depend on what your needs are.
First, if you only need a small number of cake servings and you want to make your cake look bigger, a fake tier can be added to the cake in order to make it look more impressive. As far as I've seen, most bakers will charge from 75 to 80% of what a real cake tier would cost for something like that. (Some, however, will charge full price, depending on the size of the fake tier.)
Doing this will add to the cost overall, but maybe not as much as adding a real tier would. In this case, the decorator has to ice and decorate the fake tier as a part of the whole cake. The time and materials to decorate are the same, so the decorator is only saving time by not having to bake the tier.
The second option is to serve sheet cakes, then get a fake cake to display at the reception. This probably won't save you much money unless you're buying really bad-to-mediocre sheet cakes. You'll still have the expense of either buying or renting the fake wedding cake on top of the cost of the sheets.
If you buy cheap sheet cake to save money, chance are that people won't eat it (that's what happens when you provide "inferior product.") That will waste a lot of money, so in terms of efficient spending, it's not a good idea. On the other hand, if you buy good sheet cake, you might as well just buy a good wedding cake and leave the dummy cake out of it. The cost of the good sheets plus the cost of the fake display cake will likely be close to, if not more than, what a good wedding cake would have been on its own.
The third way to use a dummy cake would be to either buy or rent a fake cake and not serve cake as the dessert at all. If you have a dessert included in a package at your reception then you'll save some money unless the cost of the dummy is comparable to a real cake. If you have to buy the dummy that might be the case, but a rental could be cheaper. One drawback to doing it this way is that you'll have a wedding cake on display during the reception, but you won't be serving any to your guests, which is a little strange.
And don't think that nobody will notice. They will, and they'll talk about how odd it was even if they don't tell you. Unless that's the normal thing for people to do in your area, and your guests expect it, they'll talk about it.
Another drawback is that rentals are rentals, and there's only so much you can do to personalize a fake cake that's been used by a number of people before you. If you want a basic design you can change some things on it, but as soon as you want to make a custom design, the charge for the rental will go up.
Basically, styrofoam dummies won't necessarily save money, and if you do a rented dummy cake you'll have an extra task to do after the wedding as far as returning the rented cake. Make sure that you do price comparisons if you think this an option you want to pursue. I've seen styrofoam cakes online that cost more than a wedding cake would cost, so I have no idea why anyone would want to use one. I've also seen them that are very cheap to rent, but I don't know how the cost would add up once you include the price of cake that you would buy to serve, if you needed to buy sheets. It all depends on how much you have to buy and what your particular situation is.
I've done fake tiers to add height to smaller wedding cakes, but I've never done entirely fake cakes for weddings. For the very reasonable amount that I charge for cakes, the savings would be eaten up by the cost of sheet cakes, and my clients would end up paying more for the fake than they would for a real cake.
Just do your homework and price everything out before believing that styrofoam cake=cheaper option!
Kara Buntin owns A Cake To Remember LLC in Richmond VA, and cake supplies online at www.acaketoremember.com and www.acaketoremember.etsy.com