I have several custom-bag listings in my store, where people can be the boss of me.
In my listing, I can give customers a good run-down of all of the customizable elements, and an idea of my process.
Also, because the customer has to buy the listing upfront, I dont run the risk that they'll abandon the project. I've only had one order where the customer didn't like her custom design after all, and I just refunded her money.
You should definitely charge a premium for a custom order though. Buyers understand that they are asking for special treatment, and they're not looking for a bargain. They're looking for an experience and a OOAK item.
http://www.etsy.com/listing/76380351/canvas-messenger-bag-custom-personalized