# Is it normal to have a staggered rate contract with \$0/hr at one level?

My contracting rate is a similar structure to the following (with the numbers changed):

• \$10/hr for less than 24 hours
• \$8/hr for 24 hours or longer

I have been talking with a client about some work and they want to hire me for a number of hours, but those hours are yet to be determined.

They have proposed to pay me a rate of \$8, with the intention that there will be more than 24 hours of work - they expect 36 hours. However, this runs the risk that we only do a small number of hours - there is a significant chance that after 8 hours of work we stop there.

What should I say or counter propose? The mathematics of my above works out to the following, but I don't know if it's appropriate and legal to propose this as a payment structure in the formal contract:

• \$10/hr for the first 24 hours
• \$0/hr for the subsequent 6 hours
• \$8/hr for the remaining hours

Is this a good idea? Is it commonly done?

EDIT: Location is the US

• I'd love to know why people are downvoting and if I can improve the question at all Commented Apr 26, 2019 at 4:49
• I think it would be perfectly fine to ask for \$10 for every hour worked. It looks to me they are really trying to exploit you. Commented Apr 26, 2019 at 10:08
• So... they wanna hire you for 36 hours for something that takes 8 hours because they think they are paying less; But wouldn't the bill be based on `a)` Hours you actually worked or `b)` Hours you were hired for? In case `a` you charge \$10 since the time you took was less than 24, but and in case `b` they are actually paying \$288 as opposed to \$80, no? Commented Apr 26, 2019 at 10:33
• Would that even be legal? I think it'd fall afoul of minimum wage laws. Commented Apr 29, 2019 at 5:00

Something that is fair for you:

\$10 per hour for the first 24 hours. \$8 per hour for every hour after that.

You don’t want a contract where more hours mean less or no payment.

• This is absolutely the correct way to implement a tiered rate structure. If you apply the cheaper rate to the entire body of hours after a certain point, you're basically working more hours for less money when you've just passed the threshold. Commented Apr 26, 2019 at 19:54

It's always helpful to include a location because different regions have different norms but I am not aware of a region where it would be normal to have a contract that includes a billing rate of \$0 for a chunk of hours.

Assuming that you want the end result to work out to exactly what your normal rate is, it would generally make more sense to offer some sort of "bulk discount"

1. \$10/hr for the first 24 hours
2. \$8/hr for subsequent hours
3. A \$48 discount once the total number of hours reaches 24

Assuming that the services you offer are things that the company is likely to need at least periodically, you could ask them to buy 24 hours of your time at \$8/hr now with the ability to use that time on subsequent projects if they don't use all of it now. So if they use 8 hours on this project, they still pay you for 24 hours and can use 16 hours in a month when the next project comes along.

• What the employer offering about a "discount" when you have done 24 hours? Commented Apr 26, 2019 at 9:05
• This seems worse than having a section of \$0 hours (which in itself is a bad idea). The problem with this is that you're essentially working for negative pay from the 24th hour untilthe 30th hour. At hour 24, you're owed \$240. At hour 25, you're owed \$240 + 8 - 24 = \$224. If you extrapolate this math out, and assume you're billing every so many hours, what are you supposed to do if one bill falls at hour 24, and the next bill falls at, say, hour 26? Are you supposed to pay them? You basically have a negative salary for any time worked between 24 and 30 hours. Commented Apr 26, 2019 at 20:00
• @dwizum - I believe the goal was that the hourly rate was lower if the client requested more hours. In other words "if I work less than 24 hours, I get paid \$10/hr for all the hours, if I work more than 24 hours, I get paid \$8/hr for all the hours". From a billing perspective, particularly on something this small, I would assume that you wouldn't send a bill until the project was over at which point you know how many hours were worked. If you want to bill more frequently, and one bill happens to have a credit for future work, so be it. Commented Apr 26, 2019 at 22:35
• @JustinCave That's the employer's goal, but not the employee's. Commented Apr 28, 2019 at 7:35
• @gnasher729 - That's not how I read the question. I believe the employer wants to pay a flat rate of \$8 and the employee wants to make a higher rate if the job ends up taking less than 24 hours. Commented Apr 28, 2019 at 12:13

It'll be too late for this client but--

I like Justin's solution of one rate for the first n hours and the discounted rate for additional hours.

But -- I would suggest just keeping it simple and charging one rate no matter the period. When I first started contracting I had read up on the staggered rate scheme and offer that to clients but it seemed to just cause a lot of confusion.

I found people were happy to just have one number to remember.

They want the lower rate because they see that you offer it. It's a haggling tactic. I think you should stick to your original fee structure.

If you want to be a little bit more creative, offer them the \$8 rate for a minimum of 24 hours, so in any case they pay at least \$192. I don't know your business but if the work is of the kind that they might want you to do a few hours here and there, make sure you write an expiration date into the contract so they can't ask you two years from now to do "those last two hours we already paid for".