I really depends on the personality of the kid and their environment, too. I had a good friend whose parents paid him for chores. They paid pretty good rates (like $5 for cleaning his room or a bathroom or $10 for shoveling their driveway). When he was in elementary school he worked really hard and had lots of money. Combined with generous gifts from his parents and grandparents on special occasions, he always had the very best stuff. Then, in 8th grade or so, he realized that he had enough toys. He just stopped doing any chores. If he wanted something big, he'd just put it on his Christmas/birthday list. His parents didn't have a recourse since they'd set up a system that involved rewards for every household task.
Like I said above, it depends on the kid's personality and the family's economic situation, but I think that an allowance along with an expectation of age-appropriate daily and weekly chores works better than paying for individual chores or hours.
Well, I think I addressed that. I had chores I always had to do that paid nothing (cleaning my room was not negotiable, for instance). The money I earned from doing additional chores was not that much--a couple bucks plus or minus, depending on the difficulty.
My parents also didn't buy me much. I paid for many of my own toys after I was old enough to do chores. For example, I bought my own NES and every single game I owned for it. Each game represented perhaps a month or two of savings. Although I had fewer games than most kids I knew, I definitely valued them more. (Or tried to. I still distinctly remember the joy of buying the Teenage Mutant Ninja Turtles NES game and the subsequent crushing disappointment of actually playing it.)
Christmas wasn't a lavish present shower that it is for a lot of kids. My parents didn't have a lot of money, so I'd usually receive a few action figures, maybe a small vehicle for them, a book, and some socks.
Perhaps I'm just using you as a substitute for all those kids that told me, "I don't get an allowance, I have to work for my money," and then finding out that their dads paid them $40/week to mow their lawns and clean their rooms.
Like I said above, it depends on the kid's personality and the family's economic situation, but I think that an allowance along with an expectation of age-appropriate daily and weekly chores works better than paying for individual chores or hours.