Use this PEO cost calculator to estimate the service fee a PEO would charge your business. Enter numbers from a real quote, or use a scenario rate if you are still budgeting.
You can calculate a per-employee-per-month (PEPM) fee, a percentage-of-payroll fee, or compare both. The calculator shows an estimated average monthly base administrative fee, an annual service fee, and a first-year service fee after any setup or recurring PEO fees you enter.
The estimate focuses on the PEO’s service fee. It does not automatically count wages, employer payroll taxes, health insurance premiums, or workers’ compensation premiums as PEO fees.
Calculate your PEO cost
Enter the administrative fee from a PEO quote, or try a rate for budgeting. Compare per-employee and payroll-percentage pricing, including setup and other service fees.
If your quote includes insurance, payroll taxes, or other costs in the rate, ask the provider to separate those charges before entering it.
Calculate your PEO service fees
Enter the rates from a PEO quote, or try a budgeting scenario. Compare per-employee and payroll-percentage pricing, including setup and other administrative charges.
Estimated PEO fees
Base administrative fees are shown separately from setup and extra service charges. These estimates use a steady headcount and payroll across a full 12 months.
Per-employee pricing
Headcount multiplied by your monthly PEPM rate.
Annual base administrative fee- Average monthly base fee
- $0
- Ongoing annual fees with extras
- $0
- First-year total with setup
- $0
- First-year fee per employee/month
- $0
- Ongoing fee as % of payroll
- 0%
Percentage-of-payroll pricing
Annual gross payroll multiplied by your quoted rate.
Annual base administrative fee- Average monthly base fee
- $0
- Ongoing annual fees with extras
- $0
- First-year total with setup
- $0
- First-year fee per employee/month
- $0
- Ongoing fee as % of payroll
- 0%
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Difference in annual base fees: $0. Break-even average annual salary: $0.
Your average annual salary based on the entered payroll and headcount: $0.
The break-even salary and comparison use the base administrative rates only. Both estimates assume the same extra fees. If the PEO quotes have different extras or service coverage, enter and evaluate those costs separately.
What this calculator includes
The estimate covers PEO administrative service fees, any one-time setup fee, and separate monthly or annual administrative charges you enter. The first-year total includes setup. The ongoing annual total excludes setup.
It does not automatically include employee wages, employer payroll taxes, insurance premiums, workers’ compensation premiums, or retirement contributions. If your quote bundles any of those with PEO fees, ask the provider for a separate breakdown before comparing administrative costs.
How PEO pricing works
PEOs commonly quote their administrative fee in one of two ways: a fixed amount for each employee each month, or a percentage of payroll. ADP describes both structures as common PEO pricing approaches.
PEPM pricing
Monthly service fee = average active employees × PEPM rate
Annual service fee = monthly service fee × 12
A PEPM fee changes mainly with headcount. Raises and bonuses do not directly change the base fee unless they also change your employee count or the provider changes the rate.
Percentage-of-payroll pricing
Annual service fee = annual gross payroll × quoted percentage
Estimated average monthly service fee = annual service fee ÷ 12
A payroll-based fee changes with payroll. Hiring, raises, overtime, and bonuses can increase the fee even when the quoted percentage stays the same.
What should you enter in the calculator?
Include charges that are fees for the PEO relationship:
- PEPM or percentage-of-payroll administrative fee
- One-time setup or implementation fee
- Recurring platform, support, or service fees
- Annual administrative or service charges
Usually leave these out of the PEO service-fee estimate:
- Employee wages
- Employer payroll taxes
- Employee payroll deductions
- Health, dental, or vision premiums
- Workers’ compensation premiums
- Retirement contributions and other employer-funded benefits
Those costs still matter to your total employment spend. Keeping them separate makes it easier to compare PEO service fees on the same basis. For a full breakdown of pricing models and other charges, see our PEO pricing and cost guide.
How to compare PEPM and percentage-of-payroll pricing
Neither structure is automatically cheaper. A PEPM fee is tied mainly to headcount, while a payroll-percentage fee is tied to the amount you pay employees.
If you enter both rates, the calculator compares the two base annual fees using the same headcount and payroll. It also shows the average annual salary where the two pricing models cost the same:
Break-even average annual pay = (PEPM rate × 12) ÷ payroll percentage
If your average annual pay is above that break-even point, the PEPM base fee is lower under the rates you entered. If it is below the break-even point, the payroll-percentage base fee is lower.
This comparison covers the administrative fee only. Benefits, workers’ compensation, service scope, contract terms, and other fees can still change the total cost of two PEO proposals.
Worked example
Suppose a company has 25 employees and $1.5 million in annual payroll. It is comparing a $125 PEPM administrative fee with a 2% payroll-based administrative fee.
- PEPM: 25 × $125 × 12 = $37,500 per year
- Percentage of payroll: $1,500,000 × 2% = $30,000 per year
- Average annual pay: $1,500,000 ÷ 25 = $60,000
- Break-even average annual pay: ($125 × 12) ÷ 2% = $75,000
Under these example rates, the payroll-percentage base fee is lower. The numbers are only there to show how the calculator works. They are not market pricing benchmarks.
What your result tells you
The calculator can show:
- Estimated average monthly base administrative fee
- Ongoing annual PEO service fee
- First-year PEO service fee, including one-time fees
- Effective cost per employee per month
- Effective service fee as a percentage of payroll
- When you compare both models, the annual base-fee difference and break-even average salary
The result does not tell you whether one PEO is a better provider or whether using a PEO will produce a positive return for your business. For those decisions, use our PEO quote comparison worksheet and PEO ROI and cost-benefit guide.
Frequently asked questions
Yes. You can enter a scenario rate to see how each pricing model behaves at your headcount and payroll. Treat the result as a budgeting scenario, not as a prediction of what a provider will quote.
No, not by default. Those costs can materially affect the economics of a PEO relationship, but they depend on the coverage and arrangement you choose. Keep them separate unless you are comparing equivalent quoted costs.
Ask the provider to break down the quote so you can see the administrative fee separately from insurance and other costs. Enter that fee in the calculator to compare pricing models on the same basis.
Use the PEO pricing guide to understand the charges in the quote, then compare providers using the same assumptions for headcount and payroll. If you want to know whether the PEO is worth the cost, use the PEO ROI guide.
