I'd like to echo Mea in a way. I am a student of hers, but I also fit the demographic that Mea sells to - craft fair enthusiasts with upper middle income. I happen to go to the types of shows she participates in. I went to many of them before she started doing them, like the Smithsonian show. I've paid up to $60 for a mug. I bought a mug from Sang Joon Park for over $40 at ACC Baltimore, broke it a week later, and bought a second mug from him at the Smithsonian show. The reason I'm estimating his price? I can't remember it. I didn't really care how much it was.
So, were there cheaper mugs at both shows? Yes. Did it matter? No.
I think you do have to find a mug that you can make for a rational price for both you, and your target market. I figure making, glazing and firing a plain mug takes about 12 minutes each mug. Provided that you are a quick thrower, don't trim, and don't do much decoration. A modest decoration, some marketing overhead, and a retail mug at $25 is my guess for a minimum price for a mug if the maker lives in the greater metro area of Washington DC.
Likewise, $35? Totally an affordable price for a handmade mug. In 1980, that was about $12.00, and in 1972, that was $6. Which happens to be right in line with a previous post. Check this out: http://www.bls.gov/data/inflation_calculator.htm, if you want to want to compare a historic price to a current going price.