I've heard of people who were making a quilt for a friend and got stiffed. People really don't understand what fabric costs these days. I'd have them go to the quilt store (and somewhere cheaper) to choose fabric. Have them pay you upfront for whatever they choose. Then charge minimum wage for your time (yes, your time is worth more than that, but it's at least a fair amount). You can see if they're really interested this way.
My usual answer if someone wants me to make them something is that I'd be glad to show them how to make a quilt...