huskyquilter makes a good point. The quilt is not for your MIL, it is for your MIL to give away. Big difference, imo.

Also for me, making a quilt that I want to make for a family member because I want to make it, is very different from making a quilt for a family member because they ask for one. The former is what I routinely do, but I doubt I will ever make a quilt on request.

I live in North West PA and some of those prices seem high. I would have her pay for fabric, backing, batting and pattern.
Then estimate how much time you will have involved to make the top and quilt it and charge her accordingly. Long arm quilters in this area charge anywhere from .01 cent per square inch to .04 cents per square inch. Custom quilting is usually the .03 to .04 cents per square inch depending on how much quilting is involved. It is hard to charge relatives, but if you don't you may be quilting for everyone else and not yourself which may takes the JOY out of it for you. (Of course, that depends on whether you want to make money at quilting or just keep it for a hobby with no pressure ... only you can decide that!!)

I live in OH, near the Amish to the west, and Mennonites to the north. It is not at all unusual to see quilts selling for upwards of a thousand dollars for a simple pattern. A more complicated pattern is much more. Also, when I went to Keepsake Quilting a few years ago, they had completed quilts on sale for 995-1585. So don't sell yourself short. Your time, skills and effort are worth the cost. If you feel guilty about the cost, invite your MIL over, and she can make the quilt while you work on something else.

I would have her buy the fabrics, batting, etc. and then make the offer for her to pay what she feels comfortable with. Explain to her that pricing would be much different for other customers, but for family, you want to be more than fair.

I wish I had the privilege of making a quilt for my MIL to give to ANYBODY. If your relationship with her is precious to you and if you will enjoy making the quilt just because of the pattern and fabrics, then I would accept the money for the supplies and tell her that she can take you to lunch and give you a gift certificate to your favorite store if she wants to. If it were my MIL, I would tell her that she has already given me something so much more valuable than money -- her son!

I haven't read all the replies yet, but since she insisted on paying you at the very least have her pay all cost of all materials, including however many spools of thread, and all sales tax if you have that in your state. I would suggest if you are purchasing when she is with you she could just pay, if you are making the purchase keep the receipt and have her pay you the total. Then I would suggest you check with 3-4 quilters in your area who quilt for pay LA or those who do so on dm. With that there should be a range in prices: I know many LA charge a range basic lowest price is usually a straight stitch in the ditch or grid, custom work is a design such as echo or feathers or any other thing besides straight stitching. This way you have an ideal of what the cost would be for commissioned work minus your labor.
At the very least you should have her pay for materials involved since she is making the request and offered to pay for it. Once she has paid for cost of all materials you can if you want offer to quilt at no charge but let her know about what the cost would be if she wants to pay for the quilting too. If you do all of this, she knows what all of the material, batting, and thread costs; and if others (his niece, 2nd cousin, etc.)want you to make them a quilt you would have an idea of what it would actually cost. I would also suggest you keep track of how many hours you spend preparing, sewing the top, and putting everything together. Because if others want to ask you to make them a quilt they should also be paying you for your time, even if it is lower than minimum wage you should be getting something for it in a commission.

I too could not charge a close relative. It certainly is fair to let her buy the supplies since she is giving the quilt as a gift. Quilting is my hobby; if it was my business I might feel differently. Sounds like you have a kind generous MIL and I bet she will find someway to show her appreciation.

I have made that quilt. The directions were great and easy to follow. Also, the large squares with the University fabric take up a lot of space. If you do charge her for your quilting, keep that in mind. If she pays for the supplies, it would be all right to low-ball your labor charge.

Totally agree!

tell her to pay what she is comfortable with? I Can't wait to see how "comfortable" she is! Wow! $20 if you are lucky. Good luck.
sandy