when it comes to family & friends

Every Tuesday I partake in my local area Chamber of Commerce Leads Group. Only one professional from each field is allowed and we discuss each other's services and try to pass referrals. It's a great way to get my company's name in the public eye and to have a few colleagues who know who I am and what my company is all about. From time to time, we tend to get astray and chit chat about random trivialities.

Today, we got on the topic of doing business with family and friends. Someone had pointed out that they stay away from offering their services to their nearest and dearest all together because it never quite works out. Another individual then spoke up and stated that when working with family and friends, she never receives her worth. In other words, when choosing between a job with a random business client and a family member who expects a discount on services, she would go for the business client.

Why is it that our close friends and even extended family members are so proud of us for being entrepeneurs and so excited to refer us, but when it comes to needing a service or a good themselves, they somewhat discredit us by wanting it for less? Is that ethical?

From the flip side, as a small business owner, I have to be honest and say that I would feel terribly guilty if I didn't give a discount to friends and family. While I'm not concerned that they would see me as cheap or greedy if I didn't, it would be me who felt like I was doing something wrong. This is what bothers me- that I feel guilty for asking for my going rate. I don't think I should have to work for less based on who the client is. All clients should be charged the same rate. But is that fair to our friends and family then, after they have been a great source of support and refferals?