Hourly rate, commission or both?

I don't do comission. there is no way to verify what they earn so they can screw you (sorry for the term, can't think of a nicer one :D )
if they don't want to pay you good enough while working and they only want comission, then it's is a very high chance that they don't want to pay you at all.
if it's somebody you have worked with for quite a while and they have paid you fine (I'm not talking about smal projects, but medium, so that you know they can afford it). then you can take the cahnce, but charcge a minim per hour amount so in case things go wrong, you didn't work for nothing ;)
because you need to consider the possibility the project will not sell, in which case comission (no matter the percentage)  from 0 is 0 ;)

if you do marketing too you can ask extra money for that, I would try that. everything depends on how much you can squeeze out of those who pay:)

ziolko.

I've done a few "x% of sales" or "profit share" and they always end up being next to nothing.
Somebody gets it into their head that this "new app" will be the greatest thing since sliced bread, etc...
So they hire you and the reality is they haven't done their homework and it's not as grand as they thought.
If you understand that they want you to go for this because they cant afford a full hourly/project rate, then try to at least get a reduced "rate" plus x% profit/sales share...
that way at least you wont be left out in the cold...
(e.g. back in the day I took $10/hour + 3% profit share instead of $15/hour)

As for hourly rate vs project, you should be able to work this out based on your knowledge.
I can't stress this enough - Do a Specification phase!!!
Make sure you are being paid for this phase too...
If you are able to get all the info you need at the start of a project, and can work out an estimate in your own mind, then go for the project rate.
If there are unanswered questions, then set project milestones, and go for an hourly rate with regular reviews with the customer: -
  to check on progress
  highlight any "unexpected factors" that weren't covered in the spec (those unanswered questions for example)

I will usually work out how many hours are needed, then multiply that by 1.3, then by my hourly rate.
but give it to them as a "total cost" not hourly.
This also works out well if my time is shared with my real job.

Devending on your experience, 9 times out of 10, you can go for a "project" cost instead of hourly rate.
I can, because I can pull in code/routines from my other apps, thus reducing the development time.
The customer only sees "need a sales screen, need a reconciliation screen, need an ftp solution.."
and you may have portions of that already...drag in your ftp service, change a few things, done in a day instead of a week... that sort of thing.

If you're doing the marketing, it sounds small, and you are being taken advantage of. I'd be thinking very carefully about the likelihood of "success" and I'd probably get a lawyer to look over the agreement for "% sales" so they don't screw you (as Ciuly so eloquently puts it)
If a project fails, you can just imagine them saying "why should I pay you now? we've got no money"

As part of a team working for several divisions, the work is on a hourly rate basis.
We register our worked hours for the unit the application is for and they get the invoice.
The hours for analysis are invoiced too.

Sounds like someone has an idea for a program...that they might need...and figure they can get it on the cheap...and then a piece of future sells...to me it sounds like your getting the short end of the deal...