PEO Pricing Comparison

Percentage of Payroll vs. Flat Per-Employee Fee

PEOs use two primary pricing models. The percentage-of-payroll model charges 2 to 6 percent of your gross payroll, which scales as your payroll grows. The flat per-employee model charges a fixed dollar amount per employee per month, typically $40 to $160, which stays predictable regardless of pay levels. The right model depends on your payroll structure and how you expect to grow.

• Percentage of payroll: 2 to 6 percent of gross payroll
• Flat per-employee: $40 to $160 per employee per month
• Percentage scales with raises; flat fee does not
• Flat fee is easier to budget; percentage can be cheaper for low-wage workforces
• Some PEOs offer a hybrid or let you choose

How to Choose the Right PEO Pricing Model

If your workforce earns above-average wages and you plan to give regular raises, the flat per-employee model usually costs less over time because the fee does not rise with pay. If your workforce earns lower wages or has variable hours, the percentage-of-payroll model may be cheaper because the fee tracks your actual payroll. We model both scenarios with your real numbers so you choose the model that minimizes your true cost.

How to Negotiate Better PEO Pricing

PEO pricing is negotiable, especially at 25+ employees. The most effective way to lower pricing is to create competition among multiple PEOs. An independent broker runs a competitive pricing process across 10 or more PEOs, which drives down fees and improves terms. We also negotiate setup fee waivers, rate locks, and volume discounts as part of the comparison.

• Create competition among multiple PEOs to drive down fees
• Ask for setup fee waivers and rate locks
• Request volume discounts at 50+ employees
• Compare bundled vs. unbundled pricing for transparency
• Negotiate renewal rate caps to prevent surprise increases