This is an occasion when RSVPing, "Bite me," is appropriate.If you can't afford Type X party for your child, then don't book it. Scale back and have what you can afford. End of. If your "guests" are expected to pay, they are not guests. They are CUSTOMERS.
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Is this really any different than having a Build A Bear Party and stating that the children can pick a bear up to $14 but that they have to pay themselves for any outfits or accessories? If your child can complete the activity (ceramic painting, I assume?) without any additional cost to you, but they have the option to do additional activities, what's the big deal? Of course if they can't do the activity without an extra $$ then that's different.
Weird and rude!
. Someone was babysitting 4 kids and brought them with them ! I was not happy about it but I didnt say a word and paid the extra 40 bucks . It is a celebration and I didnt want our guests to pay for it .
I once rented out a roller skating rink for my kids birthdays - we did a combined party because their birthdays are so close. As the venue would hold 500 people I let all the parents know that parents and siblings were welcome to attend if they wanted to. The children could wear their own roller blades if they had them. I paid for skates for the kids that were invited if they didn't have them, but parents had to pay for the rentals for the siblings/themselves if they wanted them to come ($2). I debated about doing it, but there was no way I could afford the rental of the place, skates for the invited kids, cake, drinks, etc. plus skate rentals all the siblings. No one complained and everyone had a great time. We ended up with over 200 people.
In the OP's case I think that's tacky. I fully expected to pay for everything associated with the invited kids, just not all the extras.

One of my kids once wanted a party at a ceramics place. The price was insane--would have been about $55/kid at a minimum, plus you supplied all the food and paper goods and you had to pay for at least 10 kids.
I did a little more shopping around and we ended up with a very nice party at AC Moore, painting jewelry trays for about $12/kid.
If you can't afford to throw a $$$ party, find an alternative.
That just rubs me the wrong way. I understand stating that they will only be paying for a certain priced item (or items) and if the kids want something more expensive the parents make up the difference. But not even covering the cheapest option is not right.
In this case they need to cut the guest list in half and cover the whole amount for everyone.
Is this really any different than having a Build A Bear Party and stating that the children can pick a bear up to $14 but that they have to pay themselves for any outfits or accessories? If your child can complete the activity (ceramic painting, I assume?) without any additional cost to you, but they have the option to do additional activities, what's the big deal? Of course if they can't do the activity without an extra $$ then that's different.
Do you live in the NYC metro area? My thought was I can't believe how inexpensive that ceramics place must be! I don't know of many venues under $20 a child, and I looked into ceramics, and ran. The most I've payed is $25 a head (and had to supply my own pizza, cake, and beverage).
Personally I would find a less expensive alternative or invite fewer kids than to ask my guests to pay.