Its really quite simple. As a seller, you want to frame your price in terms of value created. As a buyer, you want to frame the discussion around the cost to de

Its really quite simple. As a seller, you want to frame your price in terms of value created. As a buyer, you want to frame the discussion around the cost to deliver the product or service. Hourly pricing revolves around cost to deliver, not value created, so it's usually going to be better for the client and worse for the developer... The only time this balance changes is when the developers opportunity cost nears the value created...so the hourly rate captures most of the value... of course both sides can mitigate their risk by giving up this advantage. (i.e. if a developer charges hourly, they can make sure they dont end up under water on the project but in exvhange they wont capture the full value and vice versa.)