Hey, Kristen, that's a though one...
As Deanne says, it depends on what you have in your shop policies. Usually custom orders I make are non-refundable but that all depends on the situation and if I will be able to re-sell the item.
If it is so custom that it won't be sellable otherwise, I wouldn't refund. However, you should have this in your policies and also communicate with the buyer to explain the situation.