It sounds like you do not already do this as a business. If you are trying to start a business, then you need to price your work so that you can make a profit from it. $65 would barely cover the cost of batting and thread, let alone any of your time.
As for the "family" thing, I would only give discounts to immediate family. The MIL of SIL is not immediate family. If you have never met her, or don't see her at family gatherings, then I wouldn't consider her "family" enough to give a discount.
Plus, she has stated that she doesn't expect you to cut your prices.. SO DON'T. IF in fact she does send some business your way, then perhaps on a quilt in the future, you can give her a "discount" for all the business she has given you, but not because she is family. But just because there is the "possibility" of business, doesn't mean that any of her quilting group would use you. So for her first quilts, I would charge her full price of what ever you would charge normally, then depending on how much business you got from her, give her a discount based on the amount of work she sent your way, for her next quilt.