> made with butter rather than cheap cooking fat,
The major factor in the list you give. I can't believe someone wouldn't believe it's not butter.
> where the chocolate is real, high-quality chocolate rather than cheap cooking stuff,
Biased for being a spoiled Belgian, I suppose, but the cooking stuff [we get] is still pretty reasonable chocolate. The "chocolatey" bits in B&J or various glazes, on the other hand, are indeed quite a different thing.
> where the flavouring is essence rather than artificial flavouring,
The difference very very much depends on the actual flavour, I believe. For the amount used, I don't think the utter majority of the people are going to notice wether you use bourbon vanilla or vanillin in your dough. Toppings use more, so may or may not be more sensitive.
> where the decorating is done by hand
Doesn't change the flavour, although one does eat with one's eyes :-)
> and includes fancy shapes made out of florist paste
Muh? I suppose you mean decorating marzipan? Marzipan quality varies a lot, it's true; and the texture of the cheaper stuff can be very off, too.
> as well as a generous topping of buttercream.
And, again, real butter is indeed quite a distinct flavour.
So, yes, you're right; but I'm not convinced the difference in ingredient prices alone makes that much of a difference - I'd imagine the raw ingredient price of a single cupcake will still not rise over 1£. Labour of handmade vs. industrial, however, is going to be a much more major factor, as will be pretty shop vs. cheapo supermarket.