Coming from more than 5 years consulting, my conclusion is that hourly rate (a high rate) helped our motivations aligned.

Context is important here, the work I was doing is helping companies with big complex software projects.

Did you try something else? do you have different experience?

Our projects ranged from 2-person 2-week web app assessments to multi-quarter assessments of entire operating systems, from individual projects to long-term staff augmentation, and everything in between. I'm confident that hourly rates do not in fact align your motivations with your clients.

I agree. The vast majority of contractors are burning through days like an FTE (I know of a guy who used to sleep, a lot...I just left him alone) for double FTE pay. My understanding is that this works because investors (walstreet and VC) cringe at employee headcount. Contractors do not fall under that count. There are other aspects such that GE can say they only laid off 50 employees in a press release...forgetting to mention the 4000 contractors they just sent packing.

I'm a broken record on this as well: a huge part of the value of a contractor is that you can retain them for the duration of your project, sever them, and bring them back whenever you need them. You don't get anything resembling that kind of flexibility from an FTE, and that flexibility has value, enormous value; high-end consultants charge dearly for it, and you should too. It's part of the expected value of the transaction.