Sounds like good business to me.
More than one accountant and business adviser has told me that every year I should turnover (i.e., release) 20% of my clientèle. So every year I just stop taking the calls (I'm in the IT business) of the most painful, least profitable customers I have. I get more work done, make more money, and have more sleep at night.
If the customer was always right, why would they need you in the first place?