When it comes to public golfers, muni or just local open to public, I still think it is not just an issue of driving some customers away with a hard golf course. I think it is in the manner of presentation that makes it hard. I believe that most mid to high handicaps will stay away from a course that is too narrow, bordered by too thick or impossible rough. And, they get tired of courses with a lot of water and woods-underbrush where they loose their balls constantly, or are looking on too many holes, thus slowing up the round and making it an expensive death march.
But, I think that if it is just resistence to scoring due to challenging contours, interesting and varied greens of fast but not impossible speeds, and good bunkering with decent sand, then if the course is harder, it doesn't drive people away, it draws them. If they can be challenged but not frustrated because they find their errant balls, and have a recovery shot with expected penalty for the wayward ball, they like that, I believe.
But, the average golfer paying 25-50 for the round, doesn't want to spend half again that much on lost balls, on a long round due to hunting in rough or underbrush. I think the mantra should be; keep'em challenged, keep'em entertained, keep'em moving, let'em keep their balls.