I know it's pretty much standard to set a limit to the number of revisions a client can have.. however.....
I'm rare... I don't place a limitation on changes/iterations on most of the work I do. I allow my clients to not be concerned that "uh-oh, we've already made 3 changes. Now we have to pay for more or deal with a piece we don't like." My client love this aspect of my business. And I'm almost never "bitten" by it. But then, my clients are not the one-off, get'r'done, type of clients.
The only time I do place a limit on iterations is for projects of a more "art" nature - illustrations, logos, etc. Since redrawing over and over is not something I can do repeated at no cost. But for general layout and design... I don't limit things.
Instead, what I do is include a clause in the contract which states something along the lines of:
There are no limitations on the number of revisions you may request. You are allowed as many revisions as are necessary to complete a piece of which you can be proud to display. In my experience, this generally should take no more than 3 to 5 exchanges. However, a couple more is never a problem. Technical issues such as typographic errors, misspellings, bad alignment, should all be corrected after the second proof.
Although there is no limit to the number of change requests you can make, I ask that you keep in mind that every change requires time and effort, no matter how small it may appear. Any request for changes should be reasonable and delivered in a "bulk" fashion. In other words, please take your time when reviewing proofs, collect your thoughts, and return with a list of desired changes rather than detailing individual changes one at a time. Please be be considerate of my time and not abuse it by requesting an unreasonable amount changes. If at any time I feel the number of change requests is becoming a concern, I will open a dialog to discuss this and hopefully we can come to an amicable solution. In some cases additional fees may be used to offset an unreasonable amount of change requests.
This goes over pretty well.
If a client then starts hitting my limit, which is generally more than 10 requests, or even more than 3 requests if they are "sweeping" in nature. I open a dialog with them:
Hi Client! Thanks for sending the changes. I'm becoming a bit concerned that changes keep coming in and I'm having difficulty determining when or even if this project will be completed. Please realize my original project quote considered a reasonable amount of changes, roughly under 7 on average. This project is now hitting X rounds of changes. If you feel we're close to the finalizing with this last change request, then there's no worry. However, if you feel the piece still has a ways to go to be final, please let me know.
Clients tend to respond well to that. They will stop monkeying around and finalize the piece in one or maybe two rounds after that. Or, they are open to the discussion that they realize they are making a lot of change requests and are willing to either pay a bit more or at a minimum switch to the quote+hourly for changes. This way the amount they spend is in direct correlation to the amount of changes they request.
I try my best to never be accusatory in my dealings with the client. I always want to come off as if "Hey, (smile, smile) did you happen to realize...." Really my goal is to just remind them that my time matters. Most of the clients I've dealt with are very open to this and even if they are against any additional fees, then do reluctantly admit that they are kind of going above and beyond and they need to stop. And most do.