[PawelDecowski]

A mix of both.

I charge regular clients (the ones that I do some work for every month) by the hour.

I use a spreadsheet to track my time.

Less regular clients, I estimate the project and bill them a fixed amount.

Shameless plug: For estimating projects I use a web app I built (https://estipad.com). It lets me break projects down into tasks and subtasks and estimate those instead of the whole project. It also generates a PDF that can go straight to the client.

[ianmcgowan]

I found spreadsheets broke down once I started working on multiple projects at different rates (sometimes with the same client). Freshbooks has been awesome for me, and saved a whole bunch of headaches around tracking time and invoices. Totally worth it.