Companies spent an average of 91 hours settling regulatory and compliance-related payroll issues. But by outsourcing payroll, you can minimize the risk of costly errors and save hours each month.
The question is how do you choose a solution that provides you with both reliability and cost efficiency?
By examining the most common payroll pricing structures and understanding these elements, you will be better equipped to choose a payroll service that aligns with your company’s needs and budget.
This guide is intended to help you manage your payroll efficiently and avoid costly surprises along the way.
How payroll service pricing is structured
Payroll service pricing is typically structured around several key components that can vary depending on the provider and the specific needs of your business. Below are the primary types of fees in most payroll service pricing structures.
Base fee
The base fee is a standard charge that applies to every payroll processing cycle, regardless of the number of employees or payroll frequency. This fee typically covers the essential payroll functions, such as wage calculation, tax deductions, and direct deposit processing.
It’s the foundational cost that remains consistent across each pay period. For example, a payroll service might charge a base fee of $25-$50 per payroll run. Even if no employees are added or removed, this is the minimum fee you can expect to pay for using their service.
Set fee
There’s usually a one-time setup fee when you sign up with a payroll service provider. This covers the cost of onboarding your company, setting up employee records, and integrating any necessary software or systems.
Setup fees can vary widely depending on the complexity of your business and the payroll system being implemented. The setup fee is generally lower for small businesses with straightforward payroll needs. However, companies with more complex payroll requirements, such as multiple locations, shift workers, or industry-specific rules, could have much higher setup fees.
Monthly fee
Many payroll providers often charge a monthly subscription fee for ongoing payroll processing and support. This can be a flat rate or may vary with the number of employees.
In some cases, the monthly fee includes basic tax filing services and customer support, while in others, it only covers payroll processing, with additional services coming at an extra charge.
The monthly fee offers predictability and is ideal if you prefer to pay a consistent price over time.
License fee
Some payroll providers, especially those offering advanced or customizable software solutions, may charge a license fee. This fee grants you access to their proprietary payroll software to be integrated into your company’s existing systems.
Unlike the monthly fee that only covers the service, the license fee specifically covers the rights to use the software and its features. License fees may be charged annually or as a one-time cost.
Custom quote
Custom quotes allow payroll service providers to base their prices on your company’s unique needs. Custom quotes are often provided if you have complex payroll requirements, such as multiple pay schedules, international teams, or industry-specific compliance regulations.
The quote accounts for your employee count, payroll frequency, required integrations, and additional services. Custom quotes give your business a personalized service plan, but that also means pricing can vary widely.
Hidden fees
When evaluating different payroll service pricing, it’s vital to be aware of hidden fees that may not be included in the initial quote. Most poignantly, tax service fees often apply for handling tax filings, end-of-year forms, and compliance support.
Factors that influence payroll service pricing
The following variables shape the overall cost of outsourcing payroll.
Payroll frequency
One of the most significant factors influencing payroll service pricing is how often you run payroll. The more frequently you process payroll–weekly or bi-weekly instead of monthly, the higher the overall cost.
This is because each payroll cycle requires time, resources, and system usage. Typically, businesses that process payroll monthly incur lower fees than those with frequent pay schedules.
Number of employees
The size of your workforce also plays a major role in determining payroll costs. Many providers charge on a per-employee basis, so the more employees you have, the higher the price. Some companies offer tiered pricing based on employee headcount, which can provide bulk discounts as your business scales.
Operating in multiple states or countries
If your business operates across multiple states or countries, expect higher payroll costs. Different jurisdictions have their tax laws, compliance requirements, and reporting standards, all of which add to the complexities of payroll processing. Payroll services often account for that by charging extra for multi-state or multi-state operations.
With a global payroll provider like Multiplier, though, you can consolidate multiple vendors into one solution to save time and money. In a single solution, In a single dashboard, we calculate multi-country tax, benefits, and compensation so you don’t have to. You’re in control of end-to-end payment journeys, with full visibility every step of the way.
Features and add-ons
The scope of services you choose can significantly impact your payroll costs. Basic payroll services usually include wage calculations and tax deductions, but you can opt for additional features like benefits management, time-tracking integration, onboarding/offboarding, and HR support.
These add-ons enhance the functionality of your payroll system but often come at an additional cost. The more features and add-ons you require, the higher your final price will be.
A reliable and cost-efficient payroll solution
When selecting a payroll system or reevaluating your current one, it’s important to balance cost efficiency with reliability. You’ll want to opt for a solution at an affordable price, but it’s more important to choose one that offers all the features you need to streamline payroll wherever you want to pay employees.
After all, investing in a payroll provider isn’t just a cost–it’s an investment in efficiency, compliance, and peace of mind.
Multiplier’s global payroll solution provides a complete global solution for paying employees in over 100 countries. You can run payroll on your terms with complete visibility, advanced reporting, seamless integrations, and easy multi-country calculations. Access 24/5 support and avoid hidden costs, always.
Want to learn more? Speak with one of our experts.
