You’ve worked hard to grow your company, but because of all the day-to-day administrative hassles you face you’re having difficulty finding time to effectively manage and develop your business.
You’ve done your homework, researched Professional Employer Organizations (PEOs), and discovered they can help you offer better benefits and stay compliant with HR and labor laws, allowing you to focus more time on growing your company.
But now you’re wondering: What is the next step when partnering with PEO agencies, and how does PEO pricing work?
As with any product or service, the old adage that you get what you pay for also holds true with PEOs. The cheapest PEO isn’t always the way to go; you’ll want to engage the best PEO you can afford that also gives you the services your business needs.
When evaluating price, pay particular attention to the services that are included, if the PEO has a local presence, how proactive they are in their service delivery and that you are comparing apples with apples. There should be a fair correlation between value and price. In most cases PEOs charge in two ways: either a flat per-employee, per-year charge (PEPY), or as a percentage of total payroll.
A per-employee, per-year PEO quote simply charges a flat fee per employee (typically between $900-$1,500 PEPY). This helps make the company’s expenses more predictable. The second method of PEO pricing is calculated by taking a percentage of the total payroll for each pay period (typically between 3-8 percent). A good PEO can charge by either method depending on your requirements and preference.
In both scenarios, you might incur additional fees because of other value-added offerings such as additional employee benefits, talent management products and recruitment services. Still, growing companies often find that it is very typical for the cost of PEO services to be less than the cost of hiring one additional full-time employee.
If providing workers’ compensation, health care, unemployment costs and other HR needs is becoming increasingly difficult for your company, a PEO may be the answer for you.
The cost of HR and benefits is increasing every year, and companies can find it favorable to enter a PEO arrangement because it allows them to provide better benefits and HR services at a price they can afford. With the ever-changing state and federal regulations being passed, companies are also finding that they don’t have the resources to keep up with those changes.
Schedule a free consultation to learn what your company could pay for PEO services.Get started today