I estimate time and materials, then quote "up to" 110% of that. Then I bill for what time I actually spend on the job.

Usually it's just what I expected, but sometimes the extra 10% gets eaten up by rusty parts that refuse to come apart or damage that I just couldn't see until everything was taken apart.

If everything goes wrong and I can see that it's going to be way over estimate, I stop work and explain the situation to the customer. Usually they give the go ahead to continue the work.

Mostly though, the job comes in under estimate and everyone's happy.