Cake Pricing Question Commercial Kitchen vs Store Front

I have a Commercial Kitchen, converted a 2 car garage. I do check prices around my area, (hadn't checked since I first was almost legal, a couple years ago)  and besides for overhead, labor, and costs and profit, I want to be competitive, and get paid as much as I possibly can (duh!) I was using the an average between Wilton, and Earlene's charts , but I recently looked at some serving charts of bakeries in my area who participated in a bridal show, and saw they all use the Wilton Chart, so for ease of comparison, I switched to Wilton.  

I also noticed that prices had gone up in my area, where one had been $2.90/ $3.75 fondant/buttercream was now $3.50/$4.50. And another who doesn't have prices posted (I got her brochure last year and this year) has gone up from $3.75/$4.50 to $4.90/$5.50. 

Another's website expired 3 days ago (LMAO!) but their prices are $5 for swirls, dots, and minimal piping and $6-7 a serving for everything fancier. I was on their Facebook and they mentioned in comments that Cupcakes are $5 each, undecorated.  and an 8" cake is $150 

My prices are $2.75/$3.50. and frankly, I wasn't impressed with any of the cakes on their Facebook, save 1, but it wasn't really anything that most people would want. I hold my own with all in the area, some are better, some are not quite as good. ( and we all have our off days.)

I have a commercial kitchen, and not a store front, it is JUST ME, and no employees, so my over head is much less, so I figured I should keep my costs lower, but I have had several consultations in the last month and a few people were like "THAT'S ALL?" and "everything included??"  and other general shock that the prices are so little, so should I raise them? Maybe raise them, and see what happens? lol. I know the higher priced bakeries are booked every week, while I am not.  I make enough, when I make them, but I am thinking maybe my lower prices are being perceived as less quality.

in all actuality, it doesn't matter what they are for this question. With all my blathering, the real question is, can a home-based commercial kitchen realistically charge what everyone else is charging when customers drive to their home? I have a very modest ranch style home, nice clean neighborhood. I am just a couple turns off of a main road, in a culdesac. We have a basketball goal at the end of the driveway, sometimes our grass is long, my husband's work van is ugly, dented and leaks all over our driveway. (I have cleaned the stains a dozen times, but the damn thing still drips! And there is no street parking in the culdesac, and I can't ask him to go leak in front of the neighbor's house, up the road, he works his butt off and it seams ungrateful and disrespectful. )

We have a half-pipe (a big 27'x12' skateboard ramp) you can see in the winter, but is hidden by a funky shaped tree that was hit by lightning. My kids will often leave their abundant junk and bikes in the yard, you can see the huge playset they have, and our landscaping is nil, though we have a very nicely shaped tree in the front yard (that has white flowers in the spring that smell very "fertile' :-P ) .... I am just afraid that the customers will think I am too white trash to have higher prices, and am afraid they are thinking, "What a dump, at least it's cheap,"  and after they try them, "they really are great cakes, too bad we have to drive to this dump to get them!" 

Landscaping is a goal, as is a privacy fence in the back yard, but we don't have the money, or time and energy for that right now.