Tiered Piece Rates - Unit Totals
A tiered piece rate is a form of piece rate that includes tiers where the rate being paid per completed unit increases as production increases. Compared to a straight piece pay strategy where the same piece rate amount is applied to all production units completed, a tiered piece-rate pay strategy compensates field employees more as production increases.
How is a tiered piece rate applied?
A tiered piece rate has been added as a piece rate option within the piece rate dropdown inside locations. When selected, the tiered piece rate builder becomes accessible.
Within the tiered piece rate builder, you have the ability to select the type of piece rate you would like to apply to the unit and then design the tiers within your tiered piece rate. Tiered piece rates can have any number of tiers, there is no maximum.
Piece rate builder symbols
The “>” symbol means greater than. The “≤” means less than or equal to. Within the tiered piece-rate builder, the symbols are used to convey the floor and cap of the tier.
Tier Example:
“>0” means anything above zero. For example, that could be “0.00001”. This is the floor or the bottom of the tier.
“≤10” means 10 or anything less is the cap or the top of the tier. With this cap in place, 10.01 would fall into the second tier.
TPR Structure #2: Piece rate tiers based on the total number of units produced
PickTrace supports two structures of tiered piece rates, in this document, we will cover the structure based on the total number of units produced. click here to see the structure based on average units per hour.
Model A: Unit total following tiers
In this model, our system uses the number of total units produced to determine how many units fall within each tierExample:
| Tier # | From unit/hr | To unit/hr | Each unit paid at |
| 1 | >0 | ≤10 | $ 1 |
| 2 | >10 | ≤20 | $ 2 |
| 3 | >20 | above | $ 3 |
Scenario:
Jose worked 4 hours:
- Hour 1 = 5 units
- Hour 2 = 7 units
- Hour 3 = 4 units
- Hour 4 = 6 units
Total number of units (5+7+4+6) = 22
Calculation:
Based on the total units produced 22 and the tiers above, 10 of the units fall into tier #1, another 10 into tier #2, and the last 2 units fall into tier #3:
- The first 10 out of 22 (1 - 10)
- The second 10 out of 22 (11-20)
- The remaining 2 out of 22 (21-22)
Total Paid: $ 36
Model B: Unit total following production total
In this model, our system uses the number of total units produced to determine which piece rate to apply.Example
| Tier # | From unit/hr | To unit/hr | Each unit paid at |
| 1 | >0 | ≤10 | $1 |
| 2 | >10 | ≤20 | $2 |
| 3 | >20 | above | $3 |
Scenario:
Jose worked 4 hours:
- Hour 1 = 5 units
- Hour 2 = 7 units
- Hour 3 = 4 units
- Hour 4 = 6 units
Total number of units (5+7+4+6) = 22
Calculation:
Based on the total units produced 22 and the tiers above, all 22 units will fall into tier # 3.
Total Paid: $ 66