[PaulHoule]

Personally I wouldn't do flat fee work unless the profit margin was astronomical or there was some other factor that made it heads-I-win, tails-I-win situation (this doesn't mean the client has to lose.)

Some kinds of work are eminently estimatable, if the requirements are stable. One time I was working at a job shop for a client who needed a PHP CRUD app. Because this was built within a framework, I was able to break the requirements down and estimate tasks to within 15 minutes and be able to schedule a week's work with about 10% accuracy.

The one trouble is I'd call up the client and show them what I was doing and she'd talk for 2 hours on the phone (which we'd bill $240 for at our rate) and have an endless list of small and medium-sized tweaks she wanted. Had I not put my foot down, she would have blown the budget and schedule completely. I did put my foot down and she fired our agency.

Fixed fee projects create moral hazard for the client: if you're really good in your sales process you might be able to get 4 out of 5 clients to be reasonable and make a profit on them. If you want to keep the 5th client you'll have them overrun the budget by a large enough factor that you lose what you made on the other 4.