I did a baby block cake last year, although the blocks were bigger (5″×5″). I baked the cake in a sheet pan, then cut the size of squares I wanted. I did vanilla cake with custard and berries and carrot cake filled with cream cheese. Refrigerate so everything firms up, then trimmed my cakes to make nice even sides. I always use a cake board under the cake— the board cut to the same size as my cake as a guide. Mine were just frosted with buttercream and then I added fondant details. They are not perfect squares, but when you stand back and look at them, it’s hard to tell.
I think icing with a thick ganache would give crisp corners/edges if you wanted to just cover the whole square in fondant.
Squares are labor intensive and always take me more time than a round cake. I think $10 each is not unreasonable. How many do you have to make?