My personal take on it is that we set out with a turnaround time at the beginning, and we put it in writing as one of the line items within the contract - in some regards its a 'handshake deal' with some clients beyond that in terms of if we have to meet that drop-dead agreed date or if we have some wiggle room but we want to finish around that listed deadline nonetheless.
Planning for accurate turnaround times takes some experience both in time management and having some experience under your belt on similar type shows and also knowing what average industry-wide turnaround times are for those. It also has to take into account budget in my opinion, under the good-fast-cheap-pick-two rule to some degree. Higher budget is likely to have higher priority in my day to day work management, but this also depends upon how quick the client is to turn around materials requests (if they take a while to get back to me about pix updates or dailies or something, for instance, it can slow down the schedule and force me to lower the priority in the meantime).
In my experience, usually contracts for freelance work are simple all-in deals for the show and not day rate, so the budget quote is determined by a lot of factors with the show itself and what it will take to get the job done, both work-wise and crew-wise. This is were some background experience comes in handy too to not sell yourself short but also not gouge the client. A fair rate for them and you. I tend to plan in 'weeks' (such as, a polished dialogue pass averages about 1 reel/wk, sound effects 1-2 reels/wk depending upon how FX heavy, 2 (maybe 3) reels/wk for BGs also depending upon how heavy they are, etc - but these are just what I personally find works for me, everyone's allowances way differ). Taking these numbers into account for my workflow speed, I can calculate from the onset of the show at the time of the contract considerably accurately how long it will take to complete, and that helps us agree upon the delivery deadline and post schedule. or if they already have a deadline in mind, I use these numbers to help figure out where I can strategize the workflow and/or trim things from the budget if needs or hire crew members.
Contractually, I always require a 50% upfront deposit at time of deliverables intake/spotting session. Similar to Shaun, I provide playback and sessions to tweaks as necessary - if I have to work long distance, I send mp3s (sure, not a true 1:1 but close enough but still protects the actual work). Once they approve, either in person or over long distance, and the remainder 50% is paid, the uncompressed BWAV printmasters/stems are released. I allow for 48 hours after approval and delivery for technical fixes free of charge (limited to QC bounces, problematic files, and missing sound elements only if they already exist within the cut tracks, and technical things like that). After that window, anything done creatively or technical is billed per day as overages (or we can form a new contract).
Overall, in my opinion, shooting for a firm, drop-dead deadline is beneficial for both parties. It keeps you on track and it gives them a firm payment deadline which cannot by skirted around.