Every PEO formats its proposal differently, prices a slightly different group, and includes a different set of lines. Put three proposals side by side as they arrive and you are not comparing prices, you are comparing packaging. No PEO has any incentive to publish a method for normalising its own quote against a competitor's, so here is ours.
There are five normalisations, and the order matters, because each one depends on the one before it. Skip ahead and the later steps are measuring the wrong thing.
Who wrote this. PEO Consulting Partners is an independent PEO brokerage and consulting firm, placing clients since 2015: 100+ clients placed, 36 PEOs compared, and every comparison reconciled plan by plan and tier by tier on the same enrolled population. Client figures on this page are de-identified and aggregated. No client is named and no figure is matched to a PEO.
1. Put every quote on one census
Before anything else, confirm that every proposal priced the same people. Proposals routinely price different groups: one leaves out an employee on leave, one prices the whole company while another prices only the benefits-eligible, one excludes a COBRA participant and another includes them.
On one real comparison, the gap between pricing 33 lives and 34 lives on the same program was about $8,600 a year, purely from the extra life. Nothing about the price was different. A vendor covering fewer lives is not cheaper; it is quoting something else. Reconcile every quote to one census, the same people in the same coverage tiers, before you look at a single total.
2. Convert every administrative fee to one basis
PEOs quote the administrative fee on one of three bases. Convert all of them to a per-employee-per-month figure, then to an annual dollar total on your census.
| How it is quoted | What it means | Convert to per employee per month |
|---|---|---|
| Per employee per month (PEPM) | A flat amount for each worksite employee | Already there; multiply by employees and 12 for the annual total |
| Per check | A charge for each paycheck processed | Fee times pay periods a year (52 weekly, 26 biweekly, 24 semimonthly, 12 monthly), divided by 12 |
| Percent of payroll | A percentage of gross wages | Rate times annual gross payroll, divided by employees and by 12 |
Two things to watch. A per-check fee on weekly payroll is roughly 4.3 times the same figure on monthly payroll; that is just 52 divided by 12, arithmetic rather than a claim, but it is easy to miss when two quotes use the same number on different pay frequencies. And a percent-of-payroll fee rises automatically with raises, bonuses and overtime, so ask what counts as payroll: commissions, bonuses and overtime may all be in the base.
The spread is wider than most buyers expect. On one recent 39-employee comparison, three PEOs priced the administrative fee on the same census at $24.00, $32.15 and $150.00 per employee per month. Only a common basis makes that visible.
Holding quotes in three different formats? Send them for a free quote audit →
3. Take pass-through costs out of both sides, symmetrically
A PEO invoice carries money that would exist with or without the PEO: wages, employer payroll taxes and state unemployment tax. That money is pass-through. It belongs in no savings calculation, on either side, unless it is on both sides identically.
This is the mistake that costs the most. On one real reconciliation, roughly $131,000 of annual cost had been loaded onto one PEO's side that was not a PEO charge at all: a SUTA estimate of a tax the client already pays, and a workers' comp exposure schedule the PEO had explicitly carved out and was not charging for. Removing both changed which vendor won.
The rule: state unemployment tax is pass-through, and belongs on both sides or neither. If one proposal lists it and another does not, take it out of the first, or add your current figure to the second.
4. Treat carve-outs identically on both sides
A carve-out is a cost the proposal deliberately leaves with you, most often workers' comp kept with your current carrier, or a benefits line the PEO is not replacing. A carve-out is not a cost of that PEO. If workers' comp stays with your current carrier under one proposal, it belongs in neither column, or in both.
For every quote, establish which of three things is true of workers' comp: it is quoted, it is carved out, or it is simply not addressed. Not quoted and carved out look similar on a page and mean opposite things. A carved-out line is a cost you keep paying elsewhere. A line that was never addressed is a price you do not have yet, and the proposal is incomplete until you do.
5. Separate one-time from recurring
Finally, split every charge into what you pay once and what you pay every year. A setup fee belongs in year one only. A membership or platform fee repeats.
The fee is rarely only the fee. 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 |
The same document also listed $1,200 as a one-time setup charge, and the $1,200 appeared twice: once as setup and once as recurring. That only surfaced when the proposal was reconciled against its own components. Read every proposal line by line, and ask the PEO to confirm in writing which charges recur. Our guide to hidden fees in PEO agreements lists the lines most often missed.
When your current cost is incomplete, state a floor
The comparison needs a current-cost baseline, and the baseline is often incomplete. Medical premiums are usually known to the dollar. What the company spends today on payroll processing, HR administration, software and internal staff time often is not.
Do not estimate the missing piece. State the answer as a floor. If current medical cost is known but current payroll and HR administration spend is not:
Minimum saving = current medical cost minus (the PEO's medical cost plus the PEO's fee).
Whatever you spend on administration today is additional saving the calculation did not count, because the PEO replaces it. The result is a number the proposal cannot fall below, with the true figure somewhere above it. That is more defensible to a CFO than an estimate built on a guess, and it holds up when someone checks it.
Want your quotes normalised on one census, line by line? Get your free PEO comparison →
After the numbers: service and contract terms
Once the five normalisations are done, the cheapest proposal is a candidate, not a decision. Compare who will support your account and how requests are handled, then the contract: agreement length, renewal language and any cap on increases, termination notice, minimum fees, early termination penalties and exit support. Our guide to what a PEO costs explains how each part of the invoice is priced, and how PEO brokers get paid covers what to ask whoever prepared the comparison.
FAQ
How do you compare PEO quotes apples to apples?
Apply five normalisations in strict order, because each depends on the last: put every quote on one census, convert every administrative fee to one basis, take pass-through costs out of both sides symmetrically, treat carve-outs identically on both sides, and separate one-time from recurring charges. Only then compare totals.
Why does the census matter when comparing PEO quotes?
Because proposals routinely price different groups. On one real comparison, the gap between pricing 33 lives and 34 lives on the same program was about $8,600 a year purely from the extra life. A vendor covering fewer lives is not cheaper; it is quoting something else.
How do I convert a per-check PEO fee to per employee per month?
Multiply the per-check fee by the number of pay periods in a year and divide by 12. A per-check fee on weekly payroll is roughly 4.3 times the same figure on monthly payroll, because 52 divided by 12 is about 4.33. For a percentage-of-payroll fee, multiply the rate by annual gross payroll and divide by employees and by 12, and ask exactly what counts as payroll.
Should state unemployment tax be included in a PEO comparison?
Only if it is on both sides. State unemployment tax is a pass-through you pay with or without a PEO, so it belongs on both sides of the comparison or neither. On one real reconciliation, roughly $131,000 of annual cost had been loaded onto one PEO's side that was not a PEO charge at all, a SUTA estimate of a tax the client already paid and a workers' comp exposure schedule the PEO had carved out, and removing both changed which vendor won.
What if I do not know what I spend on payroll and HR administration today?
State the answer as a floor instead of estimating. If current medical cost is known but current administration spend is not, the saving is at least current medical cost minus the PEO's medical cost and fee. Whatever you spend on administration today is additional saving the comparison did not count, so the true figure is somewhere above the floor. A floor is more defensible to a CFO than an estimate built on a guess.