Section 2.1 identified four categories of expenditure. This chapter enlarges on them.

There are two basic ways of paying staff: either for their time or for their performance. Obviously; when costing an activity, it is important to know how people are paid, because the mechanisms of paying them are the engine that generates cost. Performance-based systems pay by result. Expected performance is usually set down in a contract and payment follows completion. Examples of performance related pay in open and distance learning include:

• paying an author a fixed sum for writing a text; • paying an editor a fixed sum for editing the text; • paying a tutor a sum for each script marked.