How Much do They Cost?

The short answer is you have to look at them as a total package because some PEOs charge a lot for administrative fees and have very low health insurance premiums and workers comp premiums and some of the opposite. In general, an admin fee is from $70 dollars to a $ 180 dollars per employee per month. There are tremendous differences in costs among these PEO’s – and watch out for hidden fees! But usually, this cost is more than absorbed by the savings – about 75% percent of the time the net savings are serious, and a responsible HR director or CFO should get a quote. 

The price of a PEO is based on a combination of things within a bundled price. It sounds like a vague answer but it’s not. These massive buying groups can now save even more money in purchasing benefits than they used to! Sometimes up to 30% for the same plans and often the same carriers (same with Workers comp and sometimes with SUTA as well).

The total cost of the PEO is a combination of the cost of the Administration, (Payroll, HR, Compliance, Time and Attendance, etc.), Worker’s Compensation, Medical, Unemployment, and a few other services. Generally, when people ask how much does a PEO cost they’re really thinking about the administrative fee, but you really have to think about the total cost and then compare it to your current expense for the apples and apples products and services.

Not only do they save you money over the first year, but they continue to have Lower Renewals than the private market.

(other related FAQs – how much time is involved to get quotes, are they really different and how do I make sure I get the best price and most importantly that I don’t pick the wrong PEO – hint – you can not trust the PEO direct salespeople) 

Read more here.

Click here to view a sample of possible savings for a company with 113 employees.

There are 700 of them – how do you even figure out the right ones to call to even narrow down the process?

This will address some of the questions, but it really brings up the other questions that you have to think about. Not exactly a checklist but really this gives you an idea of the differences in the complexities of the purchasing process. But don’t be scared – there’s an easy way to do this all – more on that later.

The comparison spreadsheet we use has 48 rows and they are all important.  I know we have said this in other FAQs but it’s worth repeating – they sound like they (PEOs) all do everything – they will all check off they do it on your spreadsheet – just ask any direct PEO salesperson from any PEO- they will tell you how the PEO they are working for (currently)  is the best – here is the short truth to this fundamental and important question – PEOs encompass so many aspects that are each complicated – from payroll to benefits to HRIS to WC, etc… even if you have one now and you think you know what to ask for it will take incredible time to do the right due diligence on them and that presumes you went to the right ones.  What their salesman says, their internet reviews and their glowingly happy client referrals they cherrypick for you is not what you need to hear or internet reviews say or happy client referrals they cherry-pick for you to talk to say is not what you need – even if you had the time to do this time-consuming project, what you need is a professional that really is objective about the companies, has dealt with their problems, knows what is really going on this year with their software or organization.  By the way, a PEO broker doesn’t charge a fee for all this – they get you better rates than if you went direct – you fill out fewer forms – and they will do the comparisons between them all. 

Why do you need to compare? Because they are so very different from technology, from service, from guarantees, from style, from admin rates, from hidden fees, from benefit plan, and WC and benefit rates and renewals, from compliance help and defense.

What are these called? They’re called PEO brokers they don’t charge a fee they get lower rates and most importantly they’re good and that is the only thing they do and there are big differences between PEO brokers, but the most important thing is they will make sure you did not pick the wrong PEO you could get fired because of it literally.

See additional FAQs on how brokers operate:

Why Do People Select ThePEOPeople.com?

How Much do PEOs Really Cost?

What is a PEO Anyway?

Why Should I Call a PEO Broker Instead of the PEO’s Directly?

PEOs talk about the intangible and soft dollars they save – tons of time, lawsuits, compliance, and did I say avoiding and defending HR lawsuits – BUT the bottom line is still what is important – how much in hard dollars will YOUR firm save.  The real answer is who knows – here’s how it plays out in getting quotes for 100 firms (between 25 and 400 employees) – 74 will save so much they really consider changing (39 with an implement it that year, and after another year of medical renewals, 16 of the rest will implement a PEO the following year), 19 will not save that much. But 6 will implement a PEO because of the way it will help them run their business better, and the other 17 the PEO will be much more and they should stay where they are. 

P.S. we define a lot of money as over 22% of the annual cost of their medical and workers’ comp premiums. 

Click here to view a sample of potential savings for a company with 113 employees.

There are 700 and growing, and our guess is you should do business with about 650 of them. Of the 50 left you have some that specialize, while others are local, and you even have some that are national – some have great service, some have great technology, some a history of great renewals, others are about to be purchased, there are some that hide so many fees you will never know about, some are CPEOs (see the FAQ on this), some are putting in new i.t. systems, some were good last year and now omg they are so terrible it’s baffling and–  wow that was a mouthful. So, in short, they all will tell you they do everything a PEO should do, but most don’t and most just don’t do them well.  Basically it’s like most businesses, but because this one encompasses so many aspects (things like medical, PTO, 401k, payroll, OSHA, etc) the worst thing you can do is pick the wrong one and end up having to switch the next year (DON’T be like Caesar in our picking the wrong PEO video linked).  Finally, once again we must caution you – the direct reps from the PEO’s are paid a lot and to do one thing – sell you the PEO they are working for that year. Our informant spills ALL!

So, who do you get objective advice from?  See our FAQ about the shopping process.

We have the clout to get you lower admin rates, lower set up fees, lower medical costs, and lower worker’s comp costs. We leave no stone unturned and have decades of experience choosing the right services for you, getting the modules you wouldn’t normally get! We tell you everything you can get and make sure nothing is left out, while also getting them for less than the PEO direct salesperson (who you will never see again after the sale) would!

They’re a big franchise supermarket chain – they couldn’t care less about the average, daily customer as their way of thinking is “We’ll just get more,” but we treat you like family, like a valued member of the community.

Because that PEO salesperson is only representing a single company, they will only try to steer you toward their direction.  They aren’t telling you what is inferior with their only product, and they’ll do whatever it takes to turn you into just another client on their list. It’s easy to overlook the problems they have if they hide all of them from you in the first place. You need to go to the people who care about getting the best for you and your employees. Macy’s doesn’t sell Gimbels.

The difference between us is we treat you like a person – they just treat you like another client on a spreadsheet, and once you sign on the dotted line with that salesperson that’s usually the last, you’ll see of them. They’ve got 299 more customers to sign-up and you’re immediately put on the backburner.

The answer can be yes – another reason you really need a professional to let you know all this and which PEO’s have what fees you may not know to even look at. Often when people receive the quote they ask if that includes health insurance, Worker’s Comp and unemployment and the answer to that is no.

PEOs really have an extraordinary range – they can be anywhere from $49 per month per employee to over $150 a month per employee. Yes, that sounds high but remember you probably save way more than that on the Medical, Workers Comp and Unemployment. Some PEOs also charge a percentage of a payroll basis, and this is often the best pricing model for those companies with lower-paid employees. Those costs might range from 2 to 3.5% of payroll. (some also charge by check)

The answer is usually yes, however not always. It depends on what you’re spending on health insurance, participation in your plans, etc. They generally can save a lot of money, buy it varies depending on your situation. But, the truth is you never know, and it’s worth the effort to get quotes because sometimes it’s dramatically cheaper. Choose an experienced PEO broker to help figure this out – they are objective, actually save you money, and save you from having to talk to 5 different PEO salespeople and finding the right PEO’s to compare.