I have never used a Dictaphone system, so hopefully someone who has will respond. But until then, I can just tell you what I have.
For clients who have tapes, I use Panasonic transcribing machines that come with a foot pedal for the machine and headphones. They only work with tapes and you have to buy a different one for each type of tape, standard and micro. For digital transcription (when clients sent me an audio file as an e-mail attachment or a CD), I use a transcription program on the computer with a transcription pedal connected to the computer and headphones.
As far a how to bill, I've seen it done many ways. Personally, I used to offer just an hourly rate, but I have now added the option of a per-audio-minute rate for everything but video and tapes. I've seen the per-audio-minute offered a lot on transcription websites, so I thought I would add it to be competitive. Some bill per page. If you're going to do medical, you might get into per line. (I don't do medical). Medical can be highly technical and therefore can be difficult to do if you don't have a medical background or have at least taken a medical terminology course. Since I've been doing this so long, I have been thinking about taking a medical terminology course, though.
Hope this helps some!