First of all it's really beautiful, very well designed and quilted. Second, I guess she really doesn't care all that much about Grandpa and his tailoring business, she just wants something that people will ooh and ahh over. Third, guess she thinks that all you have is time on your hands and would like to donate it to her. Clearly she is self centered and cheap.
That being said, she has given you a valuable lesson. It's business and you are in it to make a profit. Now is the time to review your business policies. Yes, policies. Create a little binder labeled policies and add to it a policy for RUSH orders, custom design, customer provided fabrics, additional materials, and don't forget to add a surcharge for your time and gas, etc. when you provide additional materials. Labor costs are another policy and add to that the cost of overhead (wear and tear, maintenance of machines, electric, etc.)So many things that we never think of when we get into this. If you have a policy binder, you can always refer to it as well as showing your customers. It demonstrates the seriousness of your enterprise, regardless of how big or little it is.
Don't let her badger you into a lower price than you agreed on, she is getting a steal at that! As others have said, sell it or keep it but don't give it away. Good luck and let us know how you did.