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. It 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.
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 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)
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.
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 a talk to 5 different PEO salespeople and finding the right PEO’s to compare.