How can I set a fair price for a client, considering our friendly relationship, without undervaluing myself?

I'm creating a tiered pricing option for a client that is starting up a very small business. We are former work colleagues and i've done some very small graphic design work for his wife's small beauty business as well, so I don't want to give him too steep of pricing, but I don't want to under value myself. Thoughts?

It seems to me that an important part of your message is that you want to preserve your relationship with your client, but not jeopardize your own interests.
I would suggest asking yourself: “What happens if I name my maximum price and the client refuses?”.

If it doesn't cause anxiety within, bid the price without hesitation or doubt.

If there will be anxiety and regret, here I suggest this strategy: voice your price without discounts and listen to his reaction.

There are two possible outcomes: the client agrees - and you calmly start work, or he refuses. In this case you can say: “I am interested in cooperation, what can I offer to make it mutually beneficial?”.
After that, you can discuss options: for example, lower the price, but with a limit on the number of edits (up to two or three) or with minimal adjustments. This approach will help to maintain a balance between your interests and the client's wishes