In short: An order from someone close is still work — ingredients, hours and risk. The approach that actually holds up is to name the same price for everyone, and if you want to give a discount, do it deliberately and call it a discount.
The situation everyone meets
Sooner or later every beginner faces relatives or close friends enquiring about their services, and it is easy to be caught out. A hundred questions run through your head about how, and how much, to charge — and the awkwardness usually wins.
Why free is the worst option
Because it is not actually free. The ingredients are paid for, the hours are real, and if the cake fails you absorb that too. Doing it for nothing means every such order runs at a loss, and the resentment accumulates on your side, not theirs.
Name the price first
Not refusing, but quoting. "It costs this much; for you I can do it at this" is easier to say and easier to hear than any refusal — and it keeps the conversation about the work rather than the relationship.
Count your time
Ingredients are the smaller part. A tiered cake is two days of work, and pricing that at cost of materials teaches everyone, including you, that your time is worth nothing.
When something goes wrong
Handle it exactly as you would any other order: say so honestly and offer a solution. Being related does not change what a failed cake requires.
Frequently asked questions
How do I refuse a friend a free cake
Do not refuse — quote. "It costs this much; for you I can do it at this" lands far more easily than a refusal.
Should I charge close friends for my time
Yes. Otherwise every such order runs at a loss and the resentment builds up on your side.
What if the cake for a relative goes wrong
The same as any order: say so honestly and offer a solution. The relationship does not change that.