First, a little backstory- We had an order booked for custom cookies in April, we got the deposit and everything was set, then the customer emailed and said she wanted to add to it, so we were emailing back and forth getting the details for that settled. Then she emails me this afternoon to say that she changed her mind on the whole order and decided it was outside their budget for this event, and she told me to paypal the deposit back to her.

Well, I am kicking myself because, although I told her in the quote email I sent that the deposit is non-refundable, it didn't say it on the order form that she is supposed to review and sign off on. So now I am not sure if the fact that I told her in email is enough to hold her to that, or if it's unfair to keep her deposit since it didn't say so on the order form. She has been really wishy-washy and hard to deal with, so I can't say I am completely disappointed to lose the order. The only really frustrating thing is that I have already invested waaay too much time in ironing out all of the details with her, and being really patient, and she just changes her mind. Part of me wants to just give her back the deposit and be done with it, but the other part of me wonders if I should. Thoughts?

If the contract does not say the deposit is non-refundable, even though you told her that it was nonrefundable, then you need to honor the terms of your written contract and refund the deposit.

Hmmm, Paypal for the most part, is all about satisfying the buyer. If you don't refund her deposit on your own, more than likely she'll file a complaint with Paypal (for goods not received), and they'll refund it for you out of your account (I know this from personal experience)

You win some, you lose some. But you're probably better off without this customer.

I had the same thought about paypal, I know they tend to side with the buyer in these things.