Task-Based vs. Hourly Rate
There is a major difference between an hourly and a task-based rate. Unlike the task-based rate, the hourly rate does not depend on the types of tasks an employee has to complete. It only shows how much the employee has to be paid for the hours they put into completing their assigned tasks and getting the job done.
The task-based system is an employment system in which employers bill clients and pay workers by the item or other type of work they complete, as opposed to a per-hour rate or a fixed annual salary. Implementing a task-based rate makes client billing easier and more transparent, as the clients will know how much they have to pay for each task in advance.
For example, a single employee might be assigned to complete different types of tasks as part of their daily workload, such as writing two articles and editing two articles per day. These two tasks might have different rates. The employee will complete their writing duties at a rate of $50 for each writing task and move on to their editing duties at a rate of $25 per editing task.
Why Are Task-Based Rates Used?
A task-based rate is often used to set different rates for specific tasks within a project. The task-based billing method offers greater flexibility and better representation of the employees’ work than project-based rates.
Most commonly, task-based rates are a feature in time-tracking software. Managers use the software to create specific tasks in the workload, assign them to an employee, assign a task-based rate, and send it as an invoice to the client.
Task-based rates are best applied in cases when:
- The company handles more complex projects.
- The clients require a better representation of the work put into a project.
- The clients want to know the exact costs per task.