As a novice maker, I can relate on a couple levels...
Over the past two years, varied random customers would ask about pricing on a knife, usually fairly detailed pieces, and balked at the price before rejoining by asking if I'd instead use a prepared blank they'd found elsewhere. This generally sparks three distinct feelings:
The first is a bit of a sting--not from ego, but my first run in with a knife "dealer." Like you, I was at a flea market hoping to find tools (tongs, leg vice, and anvil, my three constant hunts) when I saw the guy's booth--typical Bud K and discount "knife warehouse" import stuff despite having some nicer models by brand names. One display case had some nice stainless cutlery which was touted as "custom hand made" that quickly became apparent as kits. I finally got the guy to admit as much when I, at his request, fetched a couple pieces I had in my truck to drop off with customers on the return trip, including a couple of cable damascus and knives made from L6. His confession came while inspecting my pieces as a couple of his evidently repeat customers suddenly took an interest in my knives--to wit, the guy started in by criticizing my knives...heavily. Everything from the finish (too shiny) to accusing me of faking damascus (in his words there's no way a single burner could produce damascus) and broke out several pieces from the case to show me how what he had was superior--his argument being burl and mosaic pins qualities that shamed the antler or micarta and stainless pins on mine. He then spouted off about how the "problem with knife makers is there's no room for dealers to make a profit" when everything we make can be had for much more reasonable prices from Smokey Mountain Knife Works, and where I cornered him on fessing up they'd been kits from SMKW. His insults stung, had his criticism had been directed towards rue flaws in my work, it'd have been one thing, but the fact was he was just trying to talk me down over the fact he knew his custom pieces had just been publicly noted as anything but truly custom.
Now, I have no problem with SMKW, I'm sure they're nice folks who do their best to suit their customers, and if one of my customers brought me, say, a couple of antler slabs from them and asked I'd use them on the knife they ordered, then I'd have no problem with that, however, if they brought me a blade or chunk of their brand damascus (as opposed to a particular monosteel) then I'd say no. The damascus is easy enough--it's Pakistani produced, and I've no idea as to the quality, before I dump time and effort into a piece, I'd like to know what I'm working with will work like something produced by Alabama D.
The knife blank itself brings me to my second and third reason--reason number 2. When I was just starting out, a customer who had bought two other pieces and was eager to add a chef's knife to that set was too anxious to save up what I'd told him it would cost. Likewise, the guy has been very eager to help my business by either referral or by gifting me stuff, such as a few pounds of steel and welding a piece of AR500 on top of my ASO. So, when he came to me very sheepishy and showed me a chef's knife he'd bought from a kit site along with some cocobolo and asked if he could pay me to install the handles, I kind of felt bad saying no...and immediately regretted it. The mass produced blade had plenty of flaws, such as a twisted, unevenly tapered tang, poorly soldered bolsters, and asymmetrical (read that as poor and unintentional) grinds to name a few. What I thought a quick and easy job turned into a terrible headache fixing the flaws--my task was a mere day's work, but it took four days to fix everything else. That was my one and only time working a kit knife. Which is why, unless the blade is from another reputable maker and part of an agreed collaborative work, that I won't work prefab blades--that's not what the customer is paying for...
And that is the third reason: the customer.
I've come to appreciate my customers, not that I didn't before, but I'll explain--I've had two moments where I worried about customer reaction, most recently when I had a weird fail with 1095, and several months ago while working on an order of 15 damascus knives for a marine recon unit. I'd stress fractured my medius (middle) finger's base joint on my right hand while forging out the initial damascus billets. With the time window I had to complete the order I was worried I'd miss my ship date and contacted the customer, fairy certain I was in for a chewing out and threats...instead I was given a commissary pat on the back...and they offered to go ahead and pay for the shipment if it would have helped have someone else make the damascus. I turned them down, forged ahead, and beat my deadline by two days because of that consideration and concern for me.
My customers are paying for a fully custom piece--regardless if it's forged or stock ground. They know which process will be used ahead of time and may be the one to select which if it will help their budget. they know that despite how the blade is made, that after the initial bevels are ground, I still sit there with a sen to make sure those bevels are dead set even. As makers we each have our unique brand of voodoo, whether we hang a crawfish from the forge or harness the power of rainbows--part of the reason out customers buy our knives is they are at once mystified by the metallurgy and inspired by those that manage it to produce a work of art.
What we do is art and I for one won't cheapen my art/work by sneaking in a kit knife for a quick buck--I'm not in this for the money, just as I didn't become a college English instructor for wealth and fame. I do what I do (teaching and making) because I love it, if I wanted to be rich, I'd have studied to become an engineer or something else which would possibly put me in 6 figures.
It's also what separates us from the guys who disguise kits as custom--we're not going to balk at a customer coming back and saying something like, "I really loved what you did with this piece, but can you do one with a handle shaped like a fish?" Quite the contrary, whereas a kit-making plagiarist (and that's what it is when you claim another's work as your own and without giving them due credit) will offer up any excuse why they can't or won't, most of us would jump on the chance for an interesting challenge.
I can't and won't abide by lying to my customers--if I don't make something that goes into the knife, they're told. It doesn't matter if it's a mosaic pin--if it's mine, it's mine, but if I buy one from Jantz or Sally Martin, you better believe that's mentioned. And partly because a flea market sham artist told me forging damascus was a wasted attempt.