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How Much Does a PEO Cost? 2026 Pricing Guide
Independently researched · Updated January 2026
| Quick answer: A PEO typically costs 2%–12% of gross payroll or about $40–$160 per employee per month. The National Association of Professional Employer Organizations (NAPEO) puts the average at roughly $1,395 per employee per year. Your exact rate depends on headcount, industry, payroll size, and benefits — the only way to get a firm number is to compare quotes from a few providers. |
Below we break down how PEO pricing works, what you can expect to pay per employee and by company size, what the fee actually covers, hidden costs to watch for, and the published rates of 17 well-known PEOs. PEOcosts.com is free and vendor-neutral — we help you line up several PEOs side by side rather than pushing one brand. For a plain-English primer on the model itself, see our guide to PEO services.
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How is PEO pricing structured?
| PEOs charge one of three ways: a percentage of payroll (2%–12%), a flat fee per employee per month ($40–$160 PEPM), or a hybrid that blends a base admin fee with a payroll percentage. |
| Pricing model | Typical range | Best for |
|---|---|---|
| Percentage of payroll | 2%–12% of gross payroll | Lower-wage or variable payrolls; rate often drops as payroll grows |
| Flat fee (PEPM) | $40–$160 per employee/month | Predictable budgeting; higher-salary teams |
| Hybrid / custom | Base fee + % of payroll | Tailored service bundles |
Rule of thumb: flat per-employee pricing is easier to budget and often cheaper for higher-salary teams, while percentage-of-payroll deals frequently bundle broader benefits and HR support. Compare total value, not just the headline fee.
How much does a PEO cost per employee?
| Most businesses pay roughly $1,000–$1,500 per employee per year for comprehensive PEO service — about $85–$125 per employee per month. NAPEO puts the industry average near $1,395 per employee per year. |
Here’s roughly what that works out to by company size. These are planning estimates for full-service PEO packages, not quotes — leaner payroll-only arrangements cost less, and high-risk industries cost more.
| Employees | Estimated annual cost* | Estimated monthly cost* |
|---|---|---|
| 5 | $5,000 – $7,500 | $415 – $625 |
| 10 | $10,000 – $15,000 | $835 – $1,250 |
| 25 | $25,000 – $37,500 | $2,085 – $3,125 |
| 50 | $50,000 – $75,000 | $4,165 – $6,250 |
| 100 | $100,000 – $150,000 | $8,335 – $12,500 |
*Estimates based on a $1,000–$1,500 per-employee-per-year range for full-service PEO packages. Actual pricing varies widely by industry, location, benefits, and provider. Get exact quotes →
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What does the PEO fee actually cover?
| Your PEO fee generally covers implementation, ongoing HR administration, payroll and tax filing, compliance and risk management, and technical support. Employee benefits and workers’ comp are often billed as separate pass-through costs. |
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What factors affect PEO cost?
| PEO cost is driven mainly by headcount, the services you need, your industry risk level, your location, and the benefits you offer. Contract length and service guarantees also move the price. |
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Number of employees Larger workforces raise total cost, but per-employee rates usually fall with scale. |
Services needed Payroll and compliance cost less than full-service HR with training and legal support. |
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Industry risk level Higher-risk sectors (e.g., construction) pay more for insurance and compliance. |
Location State and local employment laws affect the cost of compliance and coverage. |
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Employee benefits Richer health, retirement, and wellness packages increase the total. |
Contract & SLAs Longer terms can earn discounts; premium service guarantees add cost. |
Because these factors vary by business, two companies of the same size can get very different quotes — see PEO providers by location to factor in regional pricing.
What hidden PEO fees should you watch for?
| Watch for setup/implementation fees, administrative add-ons, per-employee charges for onboarding or terminations, benefit-premium markups, payroll-adjustment fees, and early-termination penalties. |
Reputable PEOs fold most services into their base fee, but always ask for an itemized quote. The most common surprises are one-time setup fees (often $500–$2,000, sometimes waived), administrative add-ons layered on top of a payroll percentage, hidden benefit markups, and early-termination penalties on long contracts. Reviewing the contract line by line before signing keeps costs transparent.
Does a PEO pay for itself?
| Often, yes. NAPEO research puts the average return on PEO spending at about 27%, largely from lower benefit and insurance rates, reduced HR overhead, and fewer compliance penalties. Managing HR in-house averages roughly $2,000 per employee per year — more than the typical PEO fee. |
PEOs create savings in a few ways: they pool thousands of employees to negotiate lower rates on health insurance and workers’ comp, they cut the need for in-house HR staff, and they reduce the risk of costly compliance mistakes. Whether you come out ahead depends on your current spend and how fully you use the service — which is exactly why comparing a few quotes against your existing costs is the smart first step.
PEO vs. in-house HR: which costs more?
| For most small and mid-sized businesses, a PEO costs the same as or less than a quality in-house HR function — while adding better benefits and compliance. In-house HR gives you more control but higher fixed costs in salaries, benefits, and training. |
PEO service
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In-house HR
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How much do specific PEO companies charge?
| Published PEO rates range from about $40 to $200 per employee per month, with several providers quoting a percentage of payroll instead. Most tailor pricing to your business, so treat the figures below as starting points and request a custom quote. |
| PEO company | Published / typical pricing* | Model |
|---|---|---|
| Justworks | $59–$109 per employee/mo (Basic / Plus) | Flat PEPM |
| OnPay | From ~$40/mo + $6/employee | Payroll (PEO by quote) |
| Gusto | From ~$60/mo + $9/employee | Payroll+ (PEO custom) |
| Rippling | Custom quote | Quote-based |
| SurePayroll | From ~$29.99/mo + $6/employee | Payroll (PEO by quote) |
| ADP TotalSource | 2%–12% of payroll | % of payroll |
| Paychex | ~$55–$150 per employee/mo | PEPM / custom |
| TriNet | ~$100–$150 per employee/mo | PEPM / % of payroll |
| Insperity | ~$100–$150 per employee/mo (~1.25%–1.4% cited) | Custom |
| Deel | From $49 per worker/mo | Per worker |
| AlphaStaff | ~$40–$160 per employee/mo | PEPM |
| Infiniti HR | ~$90–$115 per employee/mo | PEPM |
| Resourcing Edge | Not published (quote-based) | Quote-based |
| Oasis (now Paychex) | ~$55–$150 per employee/mo | Custom |
| CoAdvantage | ~$20–$30 per employee/week | Flat / weekly |
| VensureHR | Custom quote | Quote-based |
| XcelHR | ~4%–12% of wages | % of payroll |
*Published or commonly-cited starting rates for reference only; prices change often and true PEO pricing is quote-based. See our full PEO company reviews for details, or compare live quotes.
What’s included: provider feature comparison
| Provider | HR outsourcing | Payroll / tax filing | Safety audits & training |
|---|---|---|---|
| Justworks | ✓ | ✓ | ✓ |
| OnPay | ✓ | ✓ | ✗ |
| Rippling | ✓ | ✓ | ✓ |
| Paychex Flex | ✓ | ✓ | ✗ |
| ADP TotalSource | ✓ | ✓ | ✓ |
| Deel | ✓ | ✓ | ✓ |
| Insperity | ✓ | ✓ | ✓ |
| TriNet | ✓ | ✓ | ✓ |
| Gusto | ✓ | ✓ | ✓ |
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Written by Michael Carr — PEOcosts.com Advisor Staff
Michael Carr, lead advisor for PEOcosts.com, brings over a decade of experience in business analysis, research, and writing, with a strong grasp of the PEO industry and the HR-outsourcing challenges businesses face. With a Business Administration degree focused on Human Resources, he pairs formal education with hands-on experience in business consulting and content strategy to produce thorough, clear, and honest reviews that help owners make informed decisions. Learn more about PEOcosts.com. |
Frequently asked questions about PEO cost
How much does a PEO cost per employee?
Most businesses pay about $1,000–$1,500 per employee per year — roughly $85–$125 per month — for full-service PEO. NAPEO puts the industry average near $1,395 per employee per year. Payroll-only arrangements cost less; high-risk industries cost more.
Is PEO cost charged as a percentage of payroll or a flat fee?
Both models exist. Percentage-of-payroll pricing typically runs 2%–12% of gross payroll, while flat per-employee pricing runs about $40–$160 per month. Some PEOs use a hybrid of a base fee plus a payroll percentage. Flat fees are easier to budget; percentage deals often bundle broader benefits.
What does a PEO cost for a small business of 10 employees?
A 10-employee company can expect roughly $10,000–$15,000 per year, or about $835–$1,250 per month, for a full-service PEO. The exact figure depends on your industry, location, and benefits — comparing quotes gives you a firm number.
Are there hidden PEO fees?
Sometimes. Watch for one-time setup fees (often $500–$2,000), administrative add-ons, per-employee onboarding or termination charges, benefit-premium markups, and early-termination penalties. Ask for an itemized quote and review the contract before signing.
Does a PEO save money compared to in-house HR?
Often, yes. In-house HR averages about $2,000 per employee per year, and NAPEO research puts the average return on PEO spending near 27% from benefit savings, lower overhead, and fewer compliance penalties. Whether you save depends on your current spend and how fully you use the service.
Why do PEO quotes vary so much between providers?
Because pricing is tailored to your business. Headcount, industry risk, location, benefits, and contract terms all move the number, and providers structure fees differently. That’s why comparing several quotes side by side is the most reliable way to find your best price.
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