I generally tell people what it costs, regardless what I am going to "charge" them. I start with supplies, then I talk about time. Someone who makes a quilt for sale is what I would call skilled labor. It is labor that requires a skill. When you think of it that way, you dont feel so bad saying that you charge $10-$20/hr. When someone looks at me funny when I quote a $20/hr price, I tell them....."If you can find a plumber, carpenter, mechanic, electrician, etc for less than $20/hr PLEASE let me know cause I want to hire them."
The biggest problem with charging only for supplies cause it is your hobby or not actually telling people what/why you charge that is that the general public continues to believe that quilts are something cheap they can pick up anywhere. Whether someone commissions a quilt from me or not, I always am happy to educate them on the skill/time/effort involved. The more WE value our work, the more everyone else will too. How many of us would look at a plumber and say "you want $20/hr for labor? why? you enjoy doing this, that is priced way out of my range, you should charge like $5/hr for the work" I would hope none of us would do that. We are paying them for their SKILL. As such, we should get paid for our SKILL. Doesnt matter if it is a hobby or not. I have to put MY stuff aside to do a commission, therefore it is not a hobby piece
it is work.
Now I generally will quote a price to get the work done, then say "since you are my ****, and I want a little more practice with XXX skill, I will just charge you supplies"
That way they understand you value your work and skill, and they are getting a deal
win-win.