When they ask "how much would it cost to make a quilt.?" I say.
"Well, the top of the quilt will need __ x $10 per yard. The back..... The batting... And it will take over ___ hrs to make. If they are quick in math, just multipling x 10 scares the off. That usually changes the conversation.

I have 3 categories of quilts that I make. #1 I purchase all materials and give the quilt as a gift #2 I purchase all materials and give the quilt for material cost only (usually close family) or #3 Customer pays for all fabrics up front and pays labor upon completion (no pay labor, no get quilt). Like most have said, if the recipient has to pay for all the fabrics, it usually shuts their mouth and their wallet, no more requests!

First, welcome to the Board! Hopefully we haven't discouraged you from ever making quilts for others--but also it's apparent that all of us have had requests that didn't work out real well, either. So your question is certainly a good one!
From your post, it's hard to tell if you want to make her a quilt or are basically stuck on how to tell her "no". Several others have given you the answer to saying "no"--I usually will site the cost of fabric and other supplies that they would need to make and also explain where their quilt may be in line with my other projects, and that ends the discussion rather fast.
BUT, if you want to make her a quilt, then I suggest you give her a couple of pattern choices (no more than 3) that you'd be willing to make, and then take her to a shop and have her purchase the fabric. And be sure to give her an estimate of how many weeks/months this might take. And if you do not do your own quilting, be sure to explain up front that it will be sent out to a long armer and give her the estimate on what it would cost. If she balks at all that, then next time you need to give her a gift, give her a quilt you've done and she'll love it.

Short and to the point !
Sandy

Do you WANT to make her a quilt? If not, remember you are not required to make anything for anyone at any time for any reason. The ball is in your court. Just smile sweetly and say NO.

I have been hinted at, inquired of and outright requested to when it comes to making a quilt for others. I always give a stock answer which includes one or more of the following responses.....I sew when I feel like it, my time is valuable, I give my finished quilts to people they (the quilts) remind me of and only to those I know will appreciate the hundred or so hours that go into the making. If this makes me sound a bit calloused or nasty, I'm sorry, but at my age, I have finally learned I just cannot make everyone happy. I worked all my life for this precious time to enjoy my life and that's just what I'm doing.

I was asked by a previous co-worker if I would make a baby quilt for expected first grandchild. I told her that she would have to buy all of the materials ... including batting, backing (funny how one who doesn't sew quilts forgets about the backing material!) and thread. Then I told her I would only charge her $125 to make the quilt. Also told her the time frame I needed to do the quilt. She agreed and selected a pattern. I went over the pattern with her and she made a list of what she needed to buy. Well time went on and I hadn't heard from the woman, so I emailed her to see how she was doing with her fabric hunt. At that point I even offered to help her shop for the fabric. I also reminded her that time was getting short. The reply I received was that she didn't have time to shop for the fabric and she wouldn't be able to pay the $125. I thanked her for her reply and to tell the truth ... was very happy I put things in her ball park. I may be retired and I may love making quilts, but I don't like it when people assume you have nothing else on your plate. That you are just waiting for someone to ask you to make a quilt and you jump.

My opinion, if you really want to make this particular quilt, is that you have your SIL buy everything for the quilt & pay you labor. You wanting to make a gifted quilt is another story, but this is a requested quilt ... not a gift.

Good luck to you!

One more thing Anna ... a BIG welcome to the board! You'll love it here!!

Debbie C .... I love your response! Especially your last sentence. Right on!

I had a very dear friend ask me to make her a beautiful queen size quilt for $25. I was a new quilter so I told her that I needed to practice much more before I made anyone a quilt. Just because someone asks for a quilt does not mean you have to make them one. I have had several veiled remarks made, but I just let them slide right off me. When I make quilts for others, I choose fabric and pattern, but I know it is basically the colors they want.