Okee - so I hope you are sitting down for this one then
Where I live (the Netherlands) that is actually a fairly common advice. The question of "how much for this cake" is very lively here as well. And the most told advice ....
"charge your ingredients and then some extra for your cake money box"
And when you ask the advisor why in heck's name that advice was given, the answer almost always is
"because if you add labour to the price, the cake becomes very expensive"
ehhh .. duhhhh ... yes, my time is quite expensive actually.
We have a ton of hobby home bakers here who are seriously undercutting and harming the business. There are no regulations, so as long as you can find somebody to buy your cake, you can bake in your own kitchen. It's how I started anyway. And I still bake out of my own kitchen, but make sure that the kitchen is clean. I regularly get people over to pick up cakes, do weddingcake consultations in my home and the house needs to be spotless. But if you start to argue on the price, the answer almost always is the same "oh, it's a hobby, so i can't charge a lot' or "if I charge more, then people stop coming" (which sort of defies the whole hobby thing, but that is different debate)
Some actually think they have a niche in the market, stating that not everybody can afford an expensive, unique and beautiful decorated cake, and therefore they make them for ridicoulous prices ($2 or less per slice is not uncommon) making it more accessible for others
But my all time favourite must be "just be glad we bake for cheap prices, we get a lot of customers and we then need to purchase all our stuff at the cake decoration shops (paid out of that cake money box) and if we did not do that ... then shops would not exist and you (the profs) would not have a place to purchase your tools" - granted ... it get's a 10 out of 10 for creativity LOL
Anyway - the problems is worldwide i guess, and that advise really is not uncommon and almost always given by people with no business skills.