LOL I must say I was totally drawn to this thread by the great title you gave it! :)
This is why I never lasted long as a cashier. It's easier for me to be polite selling my own goods. I HATED having to stick up for a store I didn't really believe in to customers that were less than polite.
Customer: Why is this so expensive? I know the materials can't have cost you more than _________
Me: My prices are based on many factors, including the time it took to make the piece. If you like, have a look around and comparison shop. You'll find that handmade pieces are of such high quality that they demand a quality price. If you like, I offer a (x amount) discount for new customers on my online shop. Here is my business card.
Customer: But I could make this myself!
Me: Really? Maybe we could swap trade secrets one day. Here is my business card. I also offer other similar items, if you're interested.
Customer: Really, I think I could just go ahead and make one.
Me: Well, have a look around. If you decide to make the piece yourself, I would love to see it. You'll find my contact information on my business card.
Customer: Ohhhh, what a good idea! I'm going to have to have my (hubby, mother, friend) make me one just like it.
Me: Oh, maybe they would be interested in attending a craft show to sell their wares as well! I would love to see their finished product. Here's my business card so you know how to contact me. If you change your mind, I will be here until (x time).
I'm sure others have their answers as well. I just grit my teeth and be polite, and always try to give them my business card. As well, I encourage them to have a look around the other vendors' tents. More often than not, they'll either buy on the spot or come back later. ;)
I wish you all the best. I know it can be frustrating!