I had the exact same situation several years ago. My "customer" showed me an old quilt someone had made for her son many years earlier and she wanted to recreate it. She was very emphatic that she wanted to pay me; she did not expect me to work for free.
So I wrote up a very detailed estimate that broke
everything down:
How much my hourly rate was.
How long it would take to design the applique.
How long it would take to cut the fabrics.
How long it would take to sew together.
How long it would take to quilt it.
How long it would take to bind it.
How much fabric it would take - top, backing, and binding - and how much it would cost.
Cost of batting.
I didn't bother with thread, because the quilt was small.
When I gave her the estimate, she was shocked. It was a crib-sized quilt, and my estimate was $200, which I thought very fair and quite cheap, for a handmade custom quilt. She looked carefully at the line items, and found one that bothered her. It was the fabric, which I had estimated to run about $100. She said "Oh, I figured you'd use your stash for that!"
It was my turn to be shocked. I paid
real money for my stash, just because it's on my shelf doesn't mean it's free!
Needless to say, that was as far as THAT project got.