Kiki is right about losing your customer base...
Pricing is something many people struggle with! Especially in the beginning, if anything you are undercharging. As you said you want people to value your work so you need to make sure you value it (and all the time you put into it) as well.
Jason Kraft has a great blog with pricing and marketing tips, there are also some pricing matrix' on CC. I think the most important thing people don't realize is even if baking from home you still have overhead-even though you're not renting a commercial space. You don't want your hobby to turn into a money drain.
Take some time to figure out how much your recipes cost, figure in your supplies (cakeboards, boxes, internal supports, etc.), shopping, cleaning, prep, baking...and that's before you've even started decorating. Time yourself for making ruffles on an 8" cake, for example write it down in a book or spreadsheet. It takes time but eventually you'll be able to look at a design and have an idea of how long it will take and charge accordingly. I still under quote from time to time and kick myself for it later
I charge per slice (carved cakes cost more) then add on for details (time x $hourly wage). There's nothing wrong with asking someone how much their budget is, it's one of my first questions, and we go from there. Someone in a previous thread mentioned the Good, Better, Best (something like that) 'system' which I've started doing with all my cakes. After I speak with my client I'll make three different sketches; Good $150, Better $250, Best $350-400 almost every time they choose from the last two and we go from there.
Again, as Kiki stated, not everyone can afford a custom cake (I can't lol) but now they are all over the tv/media so everyone wants them but not everyone realizes how much work actually goes into creating a truly unique, customized cake. So if I give someone a quote and they say well so and so will make it for less then $1/2 per slice I simply say, "Enjoy your event, hopefully we can work together some other time," even though I know that's NOT the type of customer I want! They obviously came back to me because they like my work but I won't say, "ok, you win, I'll make your four tiered cake for $150".
Be firm with your prices and enjoy what you're doing, it takes time to build a good customer base with regulars. So sorry, that's my long rant for the day