You Do Not Have To Take On Every Project That Comes Along
You do not have the equipment
You are set up for and have all the right tools for what you make, but you probably do not have the right tools for every type of project. There may be processes that you simply cannot do. You may not be able to weld for example. Maybe you can weld steel but not aluminum. It may not be worth the investment for additional equipment for a single custom project, unless it is for a very large order.
You are not confident that you can make the item
Over time your skills and knowledge will improve and you will know how to make a wide array of items. There will always be some things that you will not know how to do though. If you are not 95% sure you can make the requested item, it is probably best to turn down the project. If you end up being unsuccessful you will be out your time and materials and may have an unhappy customer as well. Be honest and let the customer know up front. They will be very appreciative.
The project may not be worth your time
You may have the tools and the skills to do a project but it still may not be worth accepting. This may be due to scheduling. You can only do so many projects per week so you have to be selective. If you have higher paying orders lined up you may decide to turn down a small project even if it is something you can do.
The project budget may also be too small to make sense. Determine how many hours you think it will take and run the numbers. It may be a lot of money but it may also take too many hours to complete. You do not want to sell yourself short and end up making $4 per hour.
You may not be set up to do the project
Sometimes you really need templates or fixtures to make certain items correctly. If you make something often you probably have a setup that allows you to make each item efficiently. Sometimes you will receive a request to make a simple looking item, but you may need to make a special fixture to create a certain bend for example. If you already had the fixture it would be no problem, but when you add in the time of designing and building the special fixture just for this order the project may not make sense anymore. If the request is for dozens or even hundreds of pieces however, it may be worth your time to take on the project and build the special fixtures.
Do not be afraid to turn a project down. Your customer may be disappointed but they will really appreciate your honesty.