Piece rate

From Wikipedia, the free encyclopedia

You have new messages (last change).
It has been suggested that this article or section be merged into piece work. (Discuss)

Piece rate is a form of compensation or payment in which a person is paid a given rate per item made.

For example, for every widget made, a person will receive $1. If person A makes 100 widgets per day and person B makes 50 widgets per day, person A will make twice as much money. If quality is equal, piece rate rewards the more productive worker and offers less to those less productive. In this regard, it is a good example of free market economics and an early example of linking pay to performance. If everyone is paid the same regardless of output, some contend there is little motivation to produce at a high level beyond the natural work ethic of that individual.

Another advantage for the company is that this method of payment helps to guarantee the costs per unit produced, which is useful for planning and forecasting purposes.

This article or section does not cite its references or sources.
Please help improve this article by introducing appropriate citations. (help, get involved!) This article has been tagged since July 2006.


 This economics or finance-related article is a stub. You can help Wikipedia by expanding it.
Retrieved from "http://en.wikipedia.org../../../p/i/e/Piece_rate.html"