Difficulty with production due to the expectations of the digital world

[benjiboy]

When I was in high school I wanted to be a magician. I was into it fairly deep, though had few paying shows; but I read a lot about how to try to make money.
One theme kept resurfacing - don't cut your price. If you feel that a client truly can't afford your price, it is better to do it for free (charity) than have others learn you went for a lower rate than you normally ask.

I know this isn't quite the same, as you have more consumables that cost money. From an advertising or reputation point of view, however, it may do more harm to have low-quality scans circulating or bad blood between you and your friend.

Better to be (known for) doing a favor for a friend than get an undeserved reputation or having poor quality examples of your work in circulation.

Since you are already in the situation, you may feel you are in "damage control" mode. There is no "good" answer as this is a difficult situation. If your friend does not "understand" your position, it may be better to produce a couple pocket-books for little or no cost - and find an excuse/occasion to make it a "gift." Charge for the large prints.
You are trying to smooth the friendship as well as gain some potentially valuable portfolio material and advertising.

What you write makes a lot of sense Truzi, but in my experiences in the past when I took some portraits of a friends kids and gave them to them as a gift, they showed them to all the members of the baby sitting circle they were in and told them that " they had this friend who did free child portraits, why don't you give him a call?".