[jtfairbank]

Seems like the typical "charging for time vs. charging for projects" debate.

You could add automated testing as an extra feature. Pay us X up front (where X covers the average income per project from manual testing) and we'll build in automated tests to your project, which saves you money down the road. Otherwise, we continue to bill for manual testing on an hourly basis. The revenue gain or loss in this case depends on how long lasting your client work is, and thus how much time you'd spend billing them.

You could also just standardize your testing pricing: pay Y per release for testing. Then automate the testing internally, but continue to bill the customer for the "testing" feature at the pre-determined rate.