Interesting story. I think you're saying it's a bad thing to treat our estimates as commitments though. I don't necessarily agree with that. I think you need to commit and just accept the fact that you won't always be accurate, but that over time you will become more accurate. Most consulting companies pad their estimates to cover this risk, but I think it's better just to bill out as high as you can.

Billing out higher but still committing has a couple of advantages. 1) You eliminate the cheap customers who would've cost you money and are generally a pain to deal with. 2) You're client has peace of mind since you're committed to finishing what you started. 3) Your client will generally respect you more because it seems as though you're time is worth more (even if others padding an estimate with hours works out to the same final amount).