We've been contending with a pricing model for our clients at Foliovision. As Foliovision has grown outside its old bounds as a single person company doing relatively contained projects, our rates have had to rise.
It's not such a problem as we are a lot more productive.
There are two primary models: flat fee and pay-per-hour.
In principle, flat-fee is more profitable (if you charge $1000 but through automatisation can get your time to render the project down to 2 hours from 12 hours you've just made $500/hour instead of $80/hour.
On the other hand, we mainly do made-to-measure work. There is rarely the opportunity to automatise to that extent. We get exponentially better results in our markets than the competition so made-to-measure clearly works.
With made-to-measure work one can spend more time quoting and negotiating spec back and forth than working.
Gradually the client can grow to hate your emails demanding expansion of project scope and budget. Generally the (busy) client would prefer to pay more for something delivered with no hassle, complete and working. Then he or she only pays once for the project, instead of twice.
Twice is their time spent micromanaging what ends up costing more or less the same anyway.