What Makes a Team Member-Based Rate Useful?
When companies assign teams to longer projects, they often mix experienced team members, assigned to more challenging tasks, with less-experienced team members, who can tackle the more straightforward tasks, such as administrative tasks, communication, etc., and learn from the senior employees.
A team member-based rate would allow companies to assign different billable rates to individual employees based on their level of experience and the amount of work they’re doing for the project. This method also allows companies to bill their clients accurately, as they know what they are paying for.
To employ a team member-based rate, the company uses time tracking software and adds a customized hourly rate for each member of the team or individual employee. The customized rate is the easiest hourly billing method for small and large teams.
Pros and Cons of Using a Team Member-Based Rate
- The company can get paid more by clients when they assign more experienced team members to a task or a project. Trained and skilled employees cost more than regular employees, but they make up for that with their skills and experience.
- Companies can get a detailed view of their costs per employee.
- Multiple team member-based rates might complicate the process of calculating employee work hours for payroll purposes or client invoicing. In comparison, a project-based rate is a simpler billing method, as clients know how much they would have to pay for the project as a whole.
- Team-member-based rates might create some unhealthy competition between employees unless it’s clear from the start that the starting rate of junior employees will increase in the following months/years based on their performance.