a.
Headcount.
More employees, more admin. But per-head pricing almost always improves with scale. That's the volume discount doing its job.
// straight answers
How much does
a PEO cost?
The honest answer is "it depends." It depends on specific things, and you can learn what they are in five minutes. Here's how PEO pricing actually works, what moves the number, and the ranges worth knowing.
By Victor Difusco · Underwriter, Cornerstone PEO
01
The two pricing models
Nearly every PEO prices the admin fee one of two ways. The fee covers payroll processing, tax filings, HR compliance, and the admin side of the stack:
Per employee per month
A flat admin fee per worksite employee. It often lands somewhere in the low hundreds per head per month, and it usually improves with scale. Fifty employees price better per head than five.
Simple, predictable, easy to budget. The most common model for small and mid-size companies.
Percentage of payroll
A cut of total payroll, often somewhere in the low-to-mid single digits as a starting point. It scales with wages, which suits higher-pay workforces.
Same admin, different math. Which model wins depends on your average wage. Run both.
Watch the parts, not the blend. Those are the admin fees. Workers' comp and benefits pass through at their own rates on top. Anyone quoting one blended number without showing the parts is selling, not explaining.
02
What drives the number
Two companies with the same headcount can price 40% apart. These are the inputs that move it:
b.
Class mix.
A roofing crew and an accounting firm don't price the same. Higher-risk work means higher comp rates, and comp is the biggest variable in the stack.
c.
Workers' comp history.
Your loss runs follow you from carrier to carrier. Clean history earns credits; rough history earns surcharges. This is the line item that moves quotes most.
d.
Benefits appetite.
A rich health plan costs more than a basic one. The PEO's edge is group buying power (a wider menu at rates that beat small-group), but the choice still sets the number.
03
Why "it depends" isn't a dodge
Every input above changes the quote. A PEO that gives you a number without asking about class codes, payroll splits, and loss history is guessing, and you'll pay for the guess later when the real underwriting lands.
The underwriter's version: send the inputs, get a real number in days. Anything faster than that is a sales estimate, not a price.
The honest cost note. The question is never "does it cost money." Run the other column: the penalty for the missed filing, the comp audit true-up, the renewal you overpaid because nobody checked the class codes, and your own hours at midnight. Most owners are already paying for a PEO. They're just paying for it in the most expensive way possible.
04
Want a real number?
Send me headcount, what the business does, and where. I'll tell you what drives your price and whether the stack earns it. No quote games.
Victor Difusco · Underwriter, Cornerstone PEO · 1 S Main St, Medford, NJ 08055