Hmmmm...well, you don't want to "low ball" it, but yet you don't want to lose the sale. My $.02 would be to treat this as a project (like a new roof, new carpeting, etc.) and you're the consultant who will complete the project. In each of those cases, the salesman / consultant provides an estimate based on price of all the components in the project. You will have to decide if you want to add a percentage to each of these costs so as to have some "wiggle room". You may run out of something and need to replenish your supply.
So, here's my suggestion: Break this project into all its components:
Fabric -- estimated cost if purchased at a quilting shop, Wal-Mart, JoAnn's, Hancocks, or an on-line store. If your client goes for the on-line option, be sure to include shipping costs if you're expected or order it.
Laundering, Ironing, Cutting, and Piecing -- estimate the number of hours
Thread -- estimate number of spools at x-price
Batting -- based up type (wool, polyester, cotton, silk, other) and size
Sandwiching and basting all the layers -- estimated number of hours
Quilting -- You will need to find out the cost, based on quilt size, if you took it to someone to be quilted. Break this out to include the options of hand quilted, non-specific designs in the quilting, and specific designs (hearts, flowers, birds, etc.)in the quilting
Number of hours you believe it will take to complete the project
Cost per hour, i.e. labor (YOURS!) THE MOST EXPENSIVE COMPONENT OF THE ESTIMATE! While this is subjective, you can get some idea by checking with other professional quilters. Then you will have to decide the worth and value of your time. Just remember, as an example, that most of the cost of having someone install carpet, fix your plumbing, etc. is directly related to labor costs.
Payment -- 50% at signing the estimate, and 50% at completion
Once you have all of that information, present your written and itemized estimate. You will have to decide if your estimate will allow for "negotiations".
If your client balks at the initial estimate, you may want to negotiate a flat fee for the project, but be sure to include in that fee a reasonalble number of hours at your hourly rate.
The goal here is to objectively set expectations such that there are a minimal number of "surprises" as the project progresses.
Bottom line is that everything is negotiable, with the exception of your hourly rate. Your time is a commodity that is very precious. Once you've undervalued it and used it, you will never recover that spent time.
Lastly, consider the old saying that tell us to "never do business with family or friends. It can cost too much."
You could just say, "What would you be willing to pay for a custom quilt?" The answer will tell you lots about your client...and yourself, if you accept what will probably be a "low ball" number. A written, itemized estimate is an objective tool that will enable you to either proceed with the project or call it off.
While you love your craft, giving it your best efforts, as well as what it brings you in satisfaction, remember that not everyone has that same attitude / perspective. They may be just looking for another gift item or another accessory.
Hope this helps.
madolyn