For developers, XP allows you to focus on coding and avoid needless paperwork and meetings. It provides a more social atmosphere, more opportunities to learn new skills, and a chance to go home at a decent hour each night. It gives you very frequent feelings of achievement, and generally allows you to produce code that you feel good about.

For the Customer, XP creates working software faster, and that software tends to have very few defects. It allows you to change your mind whenever you need to, with minimal cost and almost no complaining from the developers. It produces reliable estimates so you can coordinate your schedule easier.

For management, XP delivers working software for less money, and the software is more likely to do what the end users actually want. It cuts risk in a couple ways: 1) It allows you to "pull the plug" on development at almost any time, and still have highly valuable code, and probably even a valuable working (if incomplete) application. 2) It reduces your dependence on individual superstars, and at the same time can improve employee satisfaction and retention.

The biggest disadvantage: It’s hard. It’s difficult to get many developers to accept the practices, and it takes a lot of discipline to keep doing them all. Customers may not like the idea of having to be so involved. Management may expect fixed-cost, fixed-scope estimates, which XP teams often refuse to create (because they are usually incorrect with any methodology).

Also, certain people may feel their jobs are being threatened, particularly architects, testers, and project managers. "Cowboy" coding "superstars" may dislike the reduction in fame, attention, and adreneline from "saving" the project at the last minute.