I agree whole-heartedly this is a great way to work if you're client is cool with it. In my experience that's a big if though.
If you can always afford to walk away then this could actually work.
I always give my client's the option of fixed or hourly and really emphasize the benefits of hourly. However I've only been taken up on the hourly offer a few times with recurring clients.
I think it's a great thing to strive for but my advice to freelancer's starting out is not to flat out refuse fixed quote unless you can afford to. Fixed, while not quite as accurate, is still workable once you get a feel for defining requirements on smaller projects. And any larger project can be broken down, so long as you're getting paid for the spec.
Whatever you do don't spend a riculous amount of time specing out a large project without being compensated. I've gotten so many RFPs that are obviously the product of spec work and I'm positive most were unpaid. In fact I guarantee there are forums dedicated to tactics and advice for getting spec work done for free.
I know it sounds trite, but if you can't afford to walk away from a project, you probably shouldn't be contracting to begin with.
I say this from hard experience, the jobs I've taken against my better instincts are the ones that have bitten me badly.
Another thing that's important is to know WHO you are pitching to. I charge predominantly T&M, and my ideal clients are existing dev teams that are looking for an extra pair of hands for a particular project. Matching your billing model with the kind of clients you want to work for greatly increases your chances for success.
I may not have been clear enough. When I say if you can always afford to walk away it's meant within the context of the post. Meaning that if you can always afford to walk away from clients who are only interested in fixed quotes, not just one job. Which in my experience anyways has been about 90% of the time (of actual contracts, not just leads). I can't afford to turn down 90% of my work... yet.
After reading some of the other comments I've decided to stop even giving them the option of an hourly rate. Works been very steady (too busy ATM) and like I said there's been very little uptake on the hourly option anyways.
I agree that it definitely makes sense to change your model to reflect the type of client.
If you can always afford to walk away then this could actually work.
I always give my client's the option of fixed or hourly and really emphasize the benefits of hourly. However I've only been taken up on the hourly offer a few times with recurring clients.
I think it's a great thing to strive for but my advice to freelancer's starting out is not to flat out refuse fixed quote unless you can afford to. Fixed, while not quite as accurate, is still workable once you get a feel for defining requirements on smaller projects. And any larger project can be broken down, so long as you're getting paid for the spec.
Whatever you do don't spend a riculous amount of time specing out a large project without being compensated. I've gotten so many RFPs that are obviously the product of spec work and I'm positive most were unpaid. In fact I guarantee there are forums dedicated to tactics and advice for getting spec work done for free.