This was the biggest "oh crap, what did we do to ourselves?" moment. Effectively saying "no" took us off those people's radars permanently.
Have you tried recontacting them? A lot of people are open to a sincere mea culpa announcing a policy change. I suspect you'll win back more than 0% of those clients, on good terms.
Re:How “We’re booked” was ruining our business
by svmegatron on Monday May 13, 2013 @11:41PM
(#5702909)
This is great advice, AND it dovetails nicely with the advice I've been seeing here a lot lately: send more email to prospective customers :-)
Raise your rates.
Another thing that is true of many professional services businesses: clients hate it when you say "No", and unless they have a process in place to balance work across multiple vendors, will prefer vendors that reliably say "Yes" to all their project requests.
Good luck, welcome to the big leagues.