How much does a PEO really cost?
Here’s the short answer –
The price of a PEO is based on a combination of things within
a bundled price. Sounds like a vague answer but it’s not.
The total cost of the PEO is 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.
Some companies charge a lot for the
administration and very little for the insurance,
while some companies charge the opposite.
That’s really why you have to look at the
combined totals to compare to each other and
to your current costs.
But what about Administrative fees?
They 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 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)
Are there other nickel and dime fees
we need to know?
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.
So do PEOs actually save you money?
The answer is usually yes, however not always.
It depends on what you’re spending on health
insurance, participations 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
Choose an experienced PEO broker to help
figure this out – they are objective, actually
save you money, and save you from having talk
to 5 different PEO salespeople and finding the
right PEO’s to compare.