"It's okay to be "chummy with her" and remain friends, just don't sell her any more cake. When you refuse her "order" tell her the pricing issue is causing friction, and you would prefer to prioritize your friendship with her over business. Then proceed to hand her the information of the nearest custom caker. I bet she would appreciate you more after one full priced cake from the competition."
^^ This. What vgcea said.
I did this successfully with a friend. After taking her business elsewhere initially and she saw that her only other two options seemed to be bakers who charged her the whole full price (I always gave her a discounted price on every cake she ordered from me frequently) or bakers who where cheaper but the quality of their cakes didn't match up to what she was used to getting from me (her words), she quickly came back to me and now pays what I quote her. Stand your ground. Good luck