We bought a Costco sheet cake for a party for our son for $18.99. It serves 48. Many compliments on the cake. One person asked where it was from and how much it cost. They were very surprised because their nephew just spent $150 on a birthday cake and simply said, "I know it's a lot, but that's how much they cost now."
This is pretty common.
We are in the middle of "birthday season" here. Finally my older kid grew out of the multiple birthday parties (he's 11, only invited to a few now). But kid #2 is in preschool and has been invited to a crap ton this year. Another this weekend.
Having been there/ done that for kid #1 many years in a row (6? 7?) I can tell you that the low-end birthday party is going to be $250. Now, what I mean by this is the following:
1. Party for 10-15 kids (if you are in preschool or school, expected to invite everyone. If you choose a different path and invite fewer, you are still going to get siblings.)
2. Party not at your house (because my house is too small, we did do a home party once)
3. Generally feeding people a meal.
So an "activity" like bowling or a gym or the YMCA starts at $250 for the party, no food included.
Park rentals are $80+
We did this for many years, and just considered the party family parties, and figured it was the price for seeing all of our friends. We worked it into our general party budget.
The parties we are attending this year are even more expensive. Rental places like the YMCA. A lot of them are at parks, with pretty elaborate foods, crafts, bouncy houses, etc. I feel a little bad for kid #2 - I happily go, let him be entertained, buy a gift. But I'm not throwing him a party. We are going to have 2 families over for dinner.
In any event, cake. I have a friend who throws a big elaborate party for her kid #1 every year. And this kid is really into elaborate cakes. For some reason, I think they don't like Costco cakes. I think they are fine, but I don't really like cake. They tend to go to the grocery store instead, and those cakes are $40+, and not decorated. Then she decorates with airplanes and stuff.
I have another friend who really likes to support the local bakery by buying elaborate cakes, and they are $150+, easily. You are paying for someone's time, skill, and expertise.
We just bake cakes in our house, occasionally will be lazy and buy cupcakes from a bakery. My hubby used to be quite good at elaborate cakes (but obviously not the same quality as a bakery). He's done a Lego cake (basically a 9x 13 with 6 upside down cupcakes), hearts, Darth Vader's face, a train, bunny, and light sabers.