How Much Does a PEO Cost in 2026? Fees, Models and Real Ranges

Most of the confusion in PEO pricing comes from treating the invoice as one number, or as a fee plus everything else. A PEO invoice has three layers, and each one answers a different question.

The three layers of a PEO invoice

Layer one: pass-through costs

Wages, payroll taxes, the employer share of FICA and state unemployment. You pay these today and you will pay them under a PEO. They appear on the invoice only because the PEO remits them for you, which is what makes the invoice enormous and the PEO look expensive. Nothing here is new money, and nothing here belongs in a savings calculation on either side.

Layer two: costs that move

Medical and ancillary premiums and workers compensation premium. These genuinely change when you join a PEO, up or down, because you are buying through the PEO's master plans and its workers compensation program instead of your own. This layer is where real savings or real increases live, and it is almost always larger than the fee.

Layer three: the administrative fee

The PEO's own revenue for running payroll, HR, benefits administration, compliance and risk. It is billed either as a flat per-employee-per-month amount, written PEPM, or as a percentage of gross payroll, usually around 2 to 4%. It is the only line that is purely new money, and the line most proposals bury.

Why you have to separate all three. A buyer who compares layer one gets a meaningless number, because the same wages and taxes sit on both sides. A buyer who compares only layer three misses where the money actually is, because layer two usually moves more dollars than the fee. Put layer one aside, price layer two on matching plans and class codes, and then judge the fee against what layer two did.

So the honest answer is two numbers, not one. On the administrative fee, only two of the 36 providers we work with publish a rate on their own website, Justworks at $79 to $124 per employee per month and Deel PEO starting at $125, and the rest quote per client and publish nothing at all. On the total invoice, it depends on your headcount, average wage, states, class codes and claims history, and how many employees take the medical plan. Below we break down each line, show the arithmetic on both models, and give you the numbers we can stand behind. We do not publish industry averages or typical savings claims, because nobody can substantiate them for your company.

What a PEO actually charges you for

Treat a PEO invoice as three kinds of money: one layer is genuinely out of everyone's hands, one is bought and therefore shopped, and one is the provider's own price and therefore negotiated. The administrative fee pays for payroll processing and tax filing under the PEO's employer identification number, W-2 production, benefits administration, HR advisory support, compliance guidance, workers comp administration and claims handling, safety and risk services, and the technology platform. When someone says a PEO is cheaper, that is the line they mean.

The other two layers behave differently. Only wages, payroll taxes and state unemployment are out of the provider's hands: you set the wages, state unemployment is set by the state, and FICA is fixed by statute. Medical, ancillary and workers compensation premiums are not pass-through. They sit in layer two because they change when you join a PEO, up or down, as you buy through its master plans and its workers compensation program instead of your own, so you shop them. Medical premiums are set by the carrier and the plan design of the plans you are buying into. Workers comp is driven by your class codes, the payroll in each code, and your loss history. No PEO can make a high-hazard class code cheap. What it can do is put you in a larger pool and manage claims well.

Line item	Who sets it	What moves it	How to compare it
Administrative fee	The PEO	Headcount, average wage, service level, contract term, negotiation	Convert to one per-employee-per-month dollar figure, then compare like for like
Medical and ancillary premiums	The carrier, through the PEO's plans	Plan design, participation rate, age and family mix, employer contribution	Price the same plan tier and the same employer contribution in both quotes
Workers compensation premium	The carrier and your class codes	Class codes, payroll by code, loss history, experience modification, state	Confirm identical class codes and payroll splits before comparing rates
Statutory taxes (SUTA, FICA)	The states and federal law	State rates, wage bases, the employing entity's experience rating	Largely not negotiable; check whether the PEO's state rate helps or hurts

This is why the cheapest administrative fee is often not the cheapest total: a provider can quote an attractive fee and lose it back on a medical renewal. It is also why a bundled quote is close to useless. If you cannot see the admin fee on its own, you cannot tell whether you are paying for service or insurance.

The error that costs the most: pass-through counted as PEO cost

The practical consequence of that distinction is the most expensive mistake in PEO comparisons. On one real reconciliation, roughly $131,000 of annual cost had been loaded onto one PEO's side of the comparison that was not a PEO charge at all. It was a state unemployment estimate of a tax the client already pays, plus a workers compensation exposure schedule that the PEO had explicitly carved out and was not charging for. Removing both changed which vendor won.

Two rules prevent it:

• State unemployment is pass-through. It is a tax you pay with or without a PEO, so it belongs on both sides of a comparison or on neither.
• A carve-out is not a cost. For every quote, establish whether workers comp is quoted, carved out, or simply not addressed. Not quoted and carved out look similar on a page and mean opposite things: a carved-out line is a premium you keep paying on your existing policy, and an unaddressed line is a price you do not have yet.

PEPM, per check or percentage of payroll

The two models produce very different bills for the same company, and the deciding variable is your average wage. A flat PEPM fee is indifferent to what you pay people. A percentage of payroll is not: it rises every time you give a raise, even though the payroll and HR work has not changed.

Here is the arithmetic on a hypothetical company. The fee levels below are illustrative, chosen to show how the models behave, not market rates and not a quote. Take a 40-person company with $70,000 average wages, so $2,800,000 in annual payroll. At an illustrative flat fee of $150 per employee per month, the administrative cost is 40 times $150 times 12, or $72,000 a year. At an illustrative 3% of payroll it is $84,000, so the flat fee wins by $12,000.

Now change one variable. Raise average wages to $95,000, so $3,800,000 in payroll. The flat fee is still $72,000. The percentage is now $114,000: same headcount, same work, a $42,000 gap. Run it the other way, dropping average wages to $45,000 and payroll to $1,800,000. The flat fee is still $72,000 and 3% is $54,000, so the percentage is cheaper by $18,000.

Higher-wage companies usually prefer PEPM, because the fee stops chasing payroll. Lower-wage, higher-headcount companies sometimes do better on a percentage. If you are offered a percentage, ask for a cap or for the PEPM equivalent, and ask what the percentage applies to: gross wages only, or gross wages plus bonuses, commissions and overtime. That definition can move the number more than the rate does.

The third basis is a fee per paycheck processed. It is the easiest of the three to misread, because the same number costs very different amounts depending on how often you run payroll. To convert it, multiply the per-check fee by pay periods per year and divide by 12. On weekly payroll that is 52 checks a year, so a per-check fee costs roughly 4.3 times what the same figure costs on monthly payroll; that is just 52 divided by 12. An illustrative $30 per check is about $130 per employee per month on weekly payroll, $65 on biweekly, $60 on semimonthly and $30 on monthly.

Basis	How it is quoted	Convert to per employee per month
PEPM	A flat amount per worksite employee	Already there
Per check	A charge per paycheck processed	Fee times pay periods a year (52, 26, 24 or 12), divided by 12
Percentage of payroll	A share of gross wages	Rate times annual payroll, divided by employees, divided by 12

Who actually publishes a PEO price

The table shows the pricing model, what each provider publishes on its own website, and contract flexibility for eight better-known providers on our panel. Where the cell says quoted per client, the provider publishes no rate and we do not put one on it.

Provider	Pricing model	Published price	Contract flexibility
Justworks	Flat PEPM (published on justworks.com/pricing)	PEO Basic $79, PEO Plus $124 per employee per month, no base fee	Month-to-month available. Annual discount offered.
CoAdvantage	PEPM, quoted per client	None; its site says it does not publish a fixed rate	Annual contracts. Competitive exit terms.
G&A Partners	PEPM, quoted per client	None; quoted per client	Annual contracts. Reasonable exit terms.
Paychex PEO	PEPM or percentage of payroll, quoted per client	None; quoted per client	Annual contracts standard.
ADP TotalSource	Percentage of payroll or PEPM, quoted per client	None; quoted per client	Annual contracts standard. Early termination fees apply.
TriNet	Percentage of payroll or PEPM, customized by company size, industry, footprint and services	None; its pricing page says it does not publish standard list pricing	Annual contracts standard.
Insperity	Custom PEPM or percentage of payroll, quoted per client	None; quoted per client	Annual contracts standard. Negotiate exit clauses carefully.
Rippling	Platform fee per user plus a quoted PEO service	Platform starts at $8 a month per user per its site; PEO service quoted per client	Annual contracts standard. Implementation fees common.

Justworks is one of only two PEOs on our panel publishing a per-employee price you can read before you talk to anyone, PEO Basic at $79 and PEO Plus at $124 per employee per month on justworks.com/pricing; the other is Deel PEO. ADP TotalSource's pricing model is percentage of payroll or PEPM, quoted per client with no published band. Rippling publishes a platform fee that starts at $8 a month per user, but its PEO service is quoted per client, so the platform rate does not tell you the PEO cost.

The bigger point is how unusual published pricing is. Of the 36 PEOs on our panel, 34 publish no price at all: their profiles record the cost as quoted per client, among them ADP TotalSource, Insperity, TriNet, Paychex PEO, AlphaStaff, Engage PEO, ExtensisHR, PrestigePEO, Questco, Resourcing Edge, Sequoia One, FrankCrum, Nextep, BBSI, GMS and Stratus HR. Deel PEO publishes a starting rate, $125 per US PEO employee per month, and Justworks publishes its two tiers. So nearly the whole market will not quote without a census. That is not evasion, since class codes and medical participation genuinely change the answer, but it does mean the only way to learn what you would pay is to put one census in front of several providers at once.

The quoted fee is rarely the whole recurring cost

Even a clearly quoted administrative fee is usually not everything you will pay every year. One real proposal carried this recurring stack:

Recurring line	Annual cost
Administrative fee	$68,400
Retirement plan administration	$1,200
Timeclock	$250
Annual membership	$1,500
Total recurring	$71,350

On top of that sat a separate one-time $1,200 implementation charge in year one. And the same $1,200 appeared twice in that one document, once as setup and once as recurring, which only surfaced when the proposal was reconciled against its own components. The practical ask: get one schedule listing every charge that can ever appear on an invoice, and written confirmation that nothing outside it can be billed. Our guide to hidden fees in PEO agreements lists the lines most often missed.

What changes the price for your company

Headcount. Per-employee fees usually step down as you grow, and most PEOs price in bands. Crossing a boundary can move your effective rate more than negotiation does, so ask where the next break sits.

Average wages. Decisive on a percentage of payroll, irrelevant on flat PEPM. It also affects pass-throughs, because state unemployment wage bases are capped and higher wages hit those caps earlier.

State mix. Every state you employ someone in is another registration, another set of filings, another unemployment rate and often another set of leave rules. Multi-state employers cost more to service.

Industry and workers comp class codes. The biggest swing factor for anyone outside an office. A roofing or trucking code prices nothing like a professional services code, and some PEOs will not underwrite higher-hazard work.

Benefits participation. How many employees enrol, and at which tier, drives the largest cost that moves. Ask what participation the quote assumes.

Claims history. Your loss runs and experience modification follow you. A clean history is worth real money in underwriting; a bad one narrows the field willing to write you.

Contract term. A longer commitment can buy a lower fee and lock you into a renewal you do not like. Justworks offers month-to-month with an annual discount; most of the panel runs annual agreements, several with early termination fees.

Is a PEO worth it at your size?

Under 10 employees. The case is access, not savings: you cannot buy a competitive group medical plan on your own, and nobody owns compliance. Several panel PEOs write this small. XcelHR states 1 to 100 employees with a sweet spot of 5 to 50, INFINITI HR 1 to 500, DecisionHR 1 to 500 plus, and ProService Hawaii markets a 1 to 25 tier. Expect a rate near the top of any band.

10 to 49 employees. The densest part of the market and where you have the most choice. Justworks and Abel HR state a sweet spot of 10 to 75, Amplify PEO 15 to 75, Emplicity and Nextep 20 to 100, Helpside 25 to 100, GMS 10 to 100 and The Employer Group 10 to 50. The decision usually comes down to whether you want the lowest-cost flat-fee platform or a named HR contact who knows your business.

50 to 250 employees. You are in the sweet spot of the national providers and you have leverage. Insperity states 25 to 500 with a sweet spot of 50 to 200, ADP TotalSource 50 to 500 with a sweet spot of 75 to 200, TriNet 15 to 500 with a sweet spot of 50 to 250, G&A Partners 5 to 250, CoAdvantage 10 to 250, and Rippling 10 to 1,000 with a sweet spot of 25 to 300. Going direct to the insurance market is credible at this size, so make the PEO compete against it and get a renewal cap in writing.

How to compare two PEO quotes properly

In short: put every quote on one census, convert every administrative fee to the same basis, take pass-through costs out of both sides symmetrically, treat carve-outs identically, separate one-time from recurring charges, and only then compare annual all-in totals, with the renewal and exit terms read before the price. The full method, with worked examples for each step, is in our guide to how to compare PEO quotes apples to apples.

That is most of what we do. We run the census once, put it in front of the panel PEOs that write companies like yours, and hand back the comparison. We are paid by the PEO you choose, so the side-by-side costs nothing. Our guides to switching PEOs and the best PEOs cover the rest.

FAQ

How much does a PEO cost per employee?

Administrative fees are commonly quoted per employee per month and the range is wide. On one recent 39-employee comparison, three PEOs quoted $24.00, $32.15 and $150.00 PEPM for the same census. The fee alone does not determine the better deal, because medical premium usually moves more money than the fee does. Only two PEOs on our panel publish a rate on their own website, Justworks at $79 (PEO Basic) and $124 (PEO Plus) per employee per month with no base fee, and Deel PEO starting at $125; the rest quote per client.

What is a PEO administrative fee?

It is the PEO's own charge for its services: payroll and tax filing, HR support, benefits administration, compliance, risk and safety work, and the technology platform. It is the only invoice line the provider fully controls and prices itself. Wages, payroll taxes and state unemployment are pass-through. Medical, ancillary and workers comp premiums are not pass-through: they move when you join, and they are usually the larger part of the bill.

PEPM or percentage of payroll: which is cheaper?

It depends on your average wage. A flat PEPM fee costs the same whether an employee earns $45,000 or $150,000, so it gets relatively cheaper as wages rise. A percentage of payroll climbs with every raise even though the administrative work has not changed. Higher-wage companies usually do better on PEPM; lower-wage, higher-headcount companies sometimes do better on a percentage. Convert both quotes to an annual dollar figure on your own census before deciding.

What is included in the PEO fee?

The fee normally covers payroll processing, tax filing and remittance under the PEO's employer identification number, W-2 production, benefits administration and enrollment, HR advisory support, policy work, compliance guidance, workers comp administration and claims management, safety and risk services, and the technology platform. What it does not cover appears on separate lines. Unemployment tax is pass-through. The cost of the benefits themselves and the workers comp premium are costs that move when you join a PEO.

Is a PEO worth it for a 10-person company?

Often yes, but the reason is benefits access rather than savings. At ten employees you usually cannot buy a competitive group medical plan on your own and nobody on staff owns compliance. Plenty of PEOs write at that size: Justworks targets 5 to 150 employees with a sweet spot of 10 to 75, XcelHR 1 to 100, Abel HR 5 to 150, and The Employer Group roughly 5 to 100. The test is whether the all-in cost beats what you can assemble yourself.

Is a PEO worth it for a 100-person company?

At 100 employees you have leverage. You sit inside the sweet spot of the larger providers: Insperity targets 25 to 500 with a sweet spot of 50 to 200, ADP TotalSource 50 to 500 with a sweet spot of 75 to 200, TriNet 15 to 500 with a sweet spot of 50 to 250, and G&A Partners 5 to 250. You are also large enough to go direct to the insurance market, so make the PEO compete on total cost and negotiate renewal caps.

How long does it take to switch to a new PEO?

Plan on four to eight weeks from a signed service agreement to the first PEO-processed paycheck. That covers census and payroll history, state registrations, workers comp underwriting, benefits setup and open enrollment, and parallel payroll testing. Switching at a quarter or plan-year boundary is cleaner: a mid-year move can split W-2s between two employers of record and can create a short 401(k) blackout during the plan transfer.

What hidden costs should I watch for in a PEO agreement?

The ones that most often get missed are one-time implementation or setup fees, payroll-related charges (off-cycle runs, manual checks, amended filings, custom reports), minimum monthly fees, termination fees and early-exit penalties, year-end processing fees, HR project fees, state registration fees, and benefits administration charges. Renewal increases are the biggest one: attractive first-year pricing can climb at renewal, so ask in writing how renewals are handled. The defense is simple: request a full fee schedule and a sample invoice before signing, and ask the provider to identify every charge that could apply to your company.

Is SUTA a PEO cost?

No. State unemployment is a tax that tracks to your experience and that you pay regardless. A SUTA figure on a proposal is an estimate of a cost you already carry, not a new charge. It should appear on both sides of a comparison or on neither.

What does workers comp carved out mean on a PEO quote?

It means the PEO is not covering workers compensation and you keep your existing policy. That premium stays where it is and should not be added to the PEO's side. A carved-out line and an unquoted line look similar on a proposal and mean opposite things.

How do I convert a per-check PEO fee to per employee per month?

Multiply the per-check fee by pay periods per year and divide by 12. On weekly payroll that makes a per-check fee roughly 4.3 times what the same number costs on monthly payroll.

The practical takeaway

Stop shopping for the lowest administrative fee. It is the most visible number on a PEO quote and the least reliable predictor of what you will spend, because the medical and workers comp premiums underneath it are larger and move independently. Get every quote broken into an isolated per-employee-per-month admin fee and itemised medical and comp premiums on the same census, plan design and class codes, with wages and taxes set to one side, compare annual all-in totals, and read the renewal and exit language before the price. If you would rather not run that across a dozen providers, send us your details and we will put the side-by-side together for free.