Unit-Based Compensation

Unit (or piece) rate-based agreements are for individual units of service and/or work products delivered, with an associated payment schedule that specifies a set amount paid for each unit. Services or work products are defined in discreet units. The agreement can be for a specific period or can be open-ended with no set end date and with provisions to update the discreet unit pricing schedule over time. The expected quality and quantity of deliverables, outcomes and associated data reporting requirements for individual service or work product units are specified in the agreement. Mechanisms for invoicing for cash payments are stipulated (e.g., invoices that identify the number of units delivered for each available service on the piece-rate schedule are submitted on a monthly basis).

For unit-based compensation to be effective (and appealing to potential partners), it must be possible to establish an equitable unit rate for payment that can be consistently measured. For example, many sales people work on commission. If what they are selling is a uniform product, then a single commission rate for each unit sold is equitable. But if the products sold are very different, the commission will typically be based on a percentage of the sale price of the product rather than a single unit rate to ensure equity.

For AT Act activities, the typical unit of measure is based on required elements in the State Plan for Assistive Technology and the Annual Progress Report (APR). However, general APR data elements (such as a device demonstration) are not granular enough to support equitable unit-based payments. Even more specific data, such as AT type, includes a wide range of device complexity within each category, which makes it challenging to use these units as a basis for equitable pay. For example, a flat $50 for each demonstration in the vision category will result in the same payment for a demonstration of multiple complex screen readers (that could require an hour or longer) as for the demonstration of simple handheld magnifiers that only takes a few minutes. If the unit pay rate established is not equitable, there may be an unintended incentive for the partner to maximize payments by conducting more demonstrations of simple devices and avoiding complex ones.

In addition, external factors must be controlled when using unit-based compensation to ensure all contractors have equitable opportunities to produce. For workers producing or selling a product, this means they have access to the raw materials needed to produce/sell as many products as they can. Applying this to AT Act services is challenging; population density and demographics, geographic remoteness, transportation availability, and other external factors will likely be highly variable between contractors. Thus, it can be very difficult to ensure contractors who are paid according to the volume of units delivered have access to the same resources and are not penalized by external factors outside their control.

Last updated January 2023