I think telling you exactly what to make is a bit off. but...
It's a fine balance between charging at the right price and overcharging.
I ran the cake stall at our fete this year and like some on here I was also of the opinion that you could charge decent price for the cakes. But on the whole people aren't prepared to pay.
The way we priced was that we priced the big home-made cakes between 3-£4, the shop-bought ones were between 1-£1.50, the shop bought little cakes/biscuits were between 50-75p, and the home-made fairy cakes/biscuits were 10p each with the bigger chocolate muffins/cookies between 20/25p. I took over £130 on my cake stall. That's £130 the school wouldn't have had, and it's all money that hasn't cost us anything - people who make cakes do so by means of a donation, it is peoples' individual choice to bake or buy.
I also thought that we could charge more than 10p for individual home-made fairy cakes, but people lose sight of is that the people usually buying the little cakes are the kids with their little pocket money bags where they have been given a pound or two to spend and so 10p is a lot when you've only got 50p-£1.
The home-made cakes and the fairy cakkes sold far better than the shop-bought ones.
And people definitely like the home-made ones - I had two people in a bidding war for my coffee and walnut cake .
But I definitely think that littler cakes are more the way to go, and don't stop baking, because people do love them, and even if they only sell for 10p each, those 10p's add up to the £130+ the school wouldn't have otherwise.