I actually don't bill by hours.
Now that I've got a solid understanding of freelance projects, how long they'll take, etc, I bill by client, by project, by phase.
for a simple project where a client needs a basic redesign (using this because... well, it's a simple example)
research (add it what is required, trend, color, etc, etc, etc)
anywhere from 10-100 initial 2d sketch concepts
refining it down to X number of concepts to move forward
present and discuss
get ready for Phase 2
I charge X amount for Phase 1 (based upon the amount of hours I already know the concepts/research/presentation/emailing back and forth will take - for example, if 20 concepts are required, it will be much less than if 100 concepts are required. 10 car designs will cost more than 10 backpack designs though.)
so for example Phase 2 may just be the "refinement stage" that I had written in the proposal, Phase 2 being production.
lets say the client decides everything is wrong wrong wrong after Phase 2 deliverables. rather than getting ready for production in Phase 3. we add in a Phase 2.1 (then I quote them for this phase).
this Phased system ensures a method of checks and balances essentially, the client keeps paying if they like the project and the flow. they don't pay all at once. and if they decide to not pay you for the Phase, you've only lost 50% of that Phase's payment (as I require 50% up front for each phase, which makes for a nice payment overlap in between phases -- 50% balance of phase 1, with 50% up front for phase 2).
its a slow road with a lot of learning, you're smart, you'll figure it out with experience
if you want to chat on the phone/wave/etc, let me know, I wouldn't mind letting you know what I know so far