PEO Consultants Blog

Putting PEO Pricing Models Under the Microscope: What You Need to Know

You’ve done your research on Professional Employer Organizations (PEOs), and are seriously considering partnering with one. One that can help you provide better benefits – at a lower cost, remain compliant with HR and labor regulations, handle payroll and taxes, and give you back the time you so desperately need to grow the business. But, one question remains – how much will a PEO cost you?

To get the biggest bang for your buck, you should on-board the best PEO you can. One that offers the services you need at a price you can afford. Just as not all PEOs are created equal, nor are their prices or pricing models.

Taking the Mystery Out of PEO Pricing Models

PEOs typically offer one of two pricing structures, however, some may offer both options:

  • Flat per-employee rate: It is probably the most popular choice for small business owners because of its cost predictability. You are charged a set rate per employee and employee benefit fees. You’re typically charged monthly, and the cost per employee varies depending on the PEO selected and the services you choose.
  • Percentage of the total payroll: In this scenario, you’re charged a percentage of your total payroll for each pay period. Depending on the size of your business and whether you employ hourly or salaried employees, the percentage charged will vary.

How do you know which one will be the most cost-effective for your business? Both are equal when it comes to value-added services, and you’ll be charged additional fees for services such as recruitment, employee on-boarding, premium employee benefits, employee training, safety training, etc.

PEO costs vary depending on whether you employ hourly or salaried workers. If you hire hourly employees, you can expect to pay more than your counterparts that do not. The reason is that it is expected that with hourly workers you will incur higher turnover rates, unemployment claims, workers’ compensation claims, etc. Salaried workers typically have a longer employment tenure and don’t file as many claims.

The size of your business also matters. Because PEOs spread their fixed costs across the employees they serve, the more workers you have, the lower your cost. However, if you own a small business with few employees, a PEO is still within your financial reach since many offer packages specifically designed for smaller companies.

And last, how many of your workers take advantage of the benefits you offer? For instance, some of your workers may be on a spouse’s benefits plan, which will ultimately help you to reduce PEO costs

Get the Best PEO the First Time

There’s a lot of time and effort that goes into finding the right PEO and finding the best PEO that provides the services you need at an affordable cost. Aside from the price, you need to ensure that the PEO you bring onboard is reliable and trustworthy.

Fortunately, there are PEO brokers like PEO Consultants to help you find the PEO that’s right for you – the very first time. From the moment you engage with us, we are with you every step of the way – from signing the contract to implementation and beyond – we have your best interests at heart. And, because our PEO partners pay us a finder’s fee, there’s no cost to you for our services.

Are you still in the consideration phase of partnering with a PEO?

Learn everything you need to know about the pros and cons of hiring a Professional Employer Organization to determine if it’s the right choice for your company.

Pros & Cons of Hiring a PEO


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