How do I price my cakes without underselling myself?

Gurpreet, this is the most common failure mode we see, and it is almost never a baking problem.

A workable structure: start from a true cost per unit that includes ingredients at actual purchase price, packaging, energy, delivery, and wastage — wastage is the line everyone omits, and for custom work it is not small. Then add your labour at a real hourly rate. Then apply a margin on top of that total, not on ingredients alone. Pricing on ingredient cost plus a multiple is where most home bakeries quietly lose money, because it silently values your time at zero.

On moving existing customers, Meera's approach is the right one. Do not renegotiate old prices, retire the old product. New sizes, new finishes, new price list. The customers who valued you will move. Some will not, and the ones who leave over a correctly priced cake were costing you money to keep.

This is exactly why pricing and costing is a taught module in our programme rather than something we assume people pick up. Being an excellent baker and being unprofitable are entirely compatible, and it is a solvable problem — but it is solved with a spreadsheet, not with more skill in the kitchen.