Embedded Software Release Life Cycle

I want to ask a rather general question related to the firmware/software release life cycle to see what are others view on this one. The context is this: you have a client for which you are developing a software for a device that is under development as well (hardware wise). Because the client also needs to develop his part (e.g.: Windows application, mobile phone app, etc) you often release new versions and send them to the client. My questions are:

• how much testing should be done prior to the release to the client? Since this is not a "public" release but under development I would say make sure you don't have obvious bugs(the ones that pop within the first two minutes of testing the device) but don't involve a separate test team just for that

• You finish development. You release your first "public" version, with all feature implemented. Knowing that there is no bug-free software, how do you decide when the software development has ended (in relation to the client)? I.e. you deliver a software with all the requested functions implemented. The client comes back with found bugs every now and then. How do you treat this bugs? Do you charge for them or do you consider them to be part of the initial development?

Thank you!