Are you certain this lady expects to pay you anything? I think sometimes people think, since that's what you do, you're happy to do it for them.

I agree with all the comments about establishing terms beforehand.

I agree with quiltsfor. A memory quilt in particular is bound up with many emotions. If you quit now she has nothing--not her precious blankets nor the memory quilts. Please honor your word. Finish both quilts with your best work. Then add one more beautiful memory--surprise her by giving them as a gift.

I have the 8" rag die for the Go machine and use pre cut batting squares. A good size rag quilt can be made in just a few hours. If this is something you want to get into for pay it will be a good investment to buy the cutter and dies. All the quilters I know that do make quilts for customers use the Accuquilt die cut machines. One of the tricks is to sew the top, middle (if using) and back together all around then quilt however, then run through the die. All the snips are done. Keep the middle at least one inch smaller then the square. Then sew the squares together. The fast way is to overlap the squares so there is rags on front and back. Missouri Star sells the pre cut batting. The 6 1/2" size is perfect for the 8 inch rag die. To sit and snip each block by hand is misery and time wasted especially if you do it for customers.

A friend once told me that "No" is complete sentence. I often add "No, sorry" and let it go. Changing the subject is good

When asked to make t-shirt quilts, I tell them that they can find cheaper places on the internet--I'm expensive.

From the amount of responses and range of comments, I think there’s a wealth of experience on QB for this topic. Can we call this Alice and you will get to the other end. Adventures along the way, some pleasant and some overwhelming.

So the easiest way to figure out how to price a quilt is to make a square mini-quilt, and use that to get an idea of a base price-per-unit for your work. I made a 20x20 doll quilt and cost of materials and labor put the price at $50, so now I know the absolute floor for a finished quilt is $25 per 10" square.

After that, I personally have a tiered pricing system based on what a person wants.
Tier 1- Don't care what it looks like or when you get it? Then it's a gift and free.
Tier 2- Choice of color way, size, and simple pattern- $10-15 per 10"
Tier 3- Total input on fabric selection and pattern- $25+

Since quilting is my hobby, I don't my factoring my desire to do it anyway into pricing for people if they're flexible about what they get. I think since you took this project on out of personal interest, it's not unreasonable to offer a deal or even make it a gift if you feel that's an acceptable outcome. Just don't hesitate that you did this for you if this person or anyone else comes around expecting free quilting.

Pokeweed; yeah. Agree. It’s a valid approach. There’s lots of ways to consider this.

Life is full of learning opportunities.

There are four 10" squares in a 20x20 quilt, so wouldn't your price per 10" square be $12.50?

You said it was just a young lady. Is she a good friend, relative, or just someone who approached you cause they heard you make quilts?
I don't advertise, or sellll my quilts, I just like keeping busy. A couple of friends have approached me in making memory things, some of them difficult some not so much. I don't really charge, but if they ask, then I tell them I like a specific beer. One even brought me some boiled crabs with beer. Since you didn't discuss $$ it seems, I would tell her whatever she feels or a gift card. I know many will not agree, but doing things with our talent for someone every once in awhile is worth more than money. Though that's just me.