I would refund the entire amount and I would include copies/breakdown of your costs and time to help explain why you cancelled the order. People don't fully understand the fixed costs much less the time involved -- which includes fabric preparation like washing, drying, ironing, cutting, etc. as well as piecing and quilting. But the fault does remain yours as you having quoted the price.
People often ask me why I don't sell my quilts, my usual reply is that I give freely but I don't work for nothing. Pretty much everyone who has ever asked me to make one for them freaks out when I estimate just the material costs, and then with minimum wage in Seattle being $15/hour and that I have 40 years of experience quilting, surely I would be worth that and I estimate that project to be roughly 100 hours start to finish, and no one has ever taken me up on it.