Sorry I don't agree with @Gerry-And-Rashid0 on this one. A guest shouldn't have to give up one of their free cancellations because a host made a mistake.
@Bronwyn42 unfortunately it sounds like you didn't read through how Airbnb worked before your listing went live and therefore ending up with the wrong pricing. This not the guests fault and it is not up to them to decide if your pricing model is too low. You shouldn't have asked them to cancel as they are now liable for the costs, when you were at fault for not setting up your pricing properly.
A hard lesson to learn when starting out. Please snooze your listing (see Airbnb Help Centre) to give you time to read through the basics around how airbnb works.
How much he will be refunded depends on your cancellation policy. At the very least he will be liable for the Airbnb fee. You need to return that to him ASAP with a huge apology and be thankful he cancelled for you. If you had to cancel you would have been liable financially and it would have showed on your listing (see host cancellations - airbnb help centre).