How Much Does A PEO Cost?
Quick Answer
PEO pricing uses one of two models: a percentage of total payroll, or a flat per-employee-per-month administrative fee. The honest comparison prices a PEO against the full stack of separate vendors plus owner hours, not against a payroll invoice alone.
PEO pricing confuses owners because the invoice is bigger than a payroll bill, and the comparison starts in the wrong place. Different products. Different math.
How is PEO pricing structured?
Two models dominate. A professional employer organization either charges a percentage of total payroll or charges a flat administrative fee per employee per month. Which model a business signs matters more over three years than whatever the opening number looks like.
Both models can produce a reasonable deal. Both can produce an expensive one. The structure determines how the cost behaves as the business changes, and businesses change.
Percentage of payroll
The fee is calculated as a share of total wages processed. That means the cost moves with payroll automatically, in both directions.
The consequence is easy to miss at signing. Every raise raises the fee. Every bonus raises the fee. A strong quarter in a commission-driven business raises the fee without any additional service being delivered. For a Las Vegas contractor whose payroll swings with project seasons, the model introduces variability into a line item most owners want to be stable.
Percentage pricing does have a fit. A business with predictable, modest wage growth may find it clean and simple, and it can start lower than the alternative.
Per employee per month
A flat administrative fee is charged for each worksite employee each month. Wage growth does not move it, which makes budgeting straightforward and makes year-over-year comparison possible.
The thing to check is what the flat fee excludes. A clean-looking per-head number with a long list of separately billed services is not the deal it appears to be.
Why does no published PEO price apply to a specific business?
Because the inputs that set the number are specific to the business. Headcount, wage levels, industry, workers compensation class codes, state footprint and the exact service mix all move a proposal independently.
Workers compensation classification is the driver owners underestimate most. A roofing crew and a bookkeeping office in the same building carry entirely different risk profiles, and that difference flows straight into the arrangement. In Clark County that means a framing contractor, a restaurant group and a title agency of identical size should expect three different proposals, and none of them tells the others anything useful.
Service mix does the rest. A business that wants full HR advisory and handbook development is buying more than a business that wants payroll and workers compensation only. Any figure quoted before those questions are answered is a placeholder wearing a decimal point. If a specific number is needed for a board deck, label it as an illustration that is invented and non-binding, because that is what it is.
What does the fee actually buy?
The bundle. Payroll processing and tax filings, HR support, compliance assistance, workers compensation coverage, benefits administration, and access to benefits pricing pooled across the organization’s client base.
That pooling is the headline for most small employers, and the mechanism behind it is co-employment, which is what lets a nine person company access benefit structures normally reserved for much larger ones. The full scope of what the arrangement covers is in what does a PEO do.
A business already paying a payroll service, an HR consultant, a workers compensation policy and a benefits program is often paying PEO-like money in pieces without ever adding it up. That is the actual comparison, and almost nobody runs it before the first sales call.
One thing the arrangement does not do is erase employer obligations. Health coverage rules still attach to the business. An applicable large employer generally has 50 or more full-time employees including full-time equivalents, and employers below that line are generally not subject to the Employer Shared Responsibility Payment whether or not coverage is offered. HealthCare.gov sets out that split in its overview of how the health care law affects businesses, and the Internal Revenue Service collects the employer provisions on its Affordable Care Act employers page. We are insurance nerds, not tax professionals, and how a co-employment arrangement interacts with a specific business’s tax filings belongs with a licensed tax professional.
What costs sit outside the headline fee?
Five categories, and each one has surprised somebody.
Implementation and setup charges, which land in the first invoice rather than the proposal. Per-transaction fees for off-cycle payroll runs, garnishment processing and similar one-offs. Benefits administration markups layered on top of premium. Year-end filing charges. And renewal behavior, which is the largest of the five because it repeats.
Ask for an itemized fee schedule in writing before signing anything. A provider that will not itemize is telling an owner something useful.
Exit terms belong in the same review. A PEO relationship touches payroll, benefits, workers compensation and employee records simultaneously, so unwinding it is a project rather than a cancellation email. What that involves is covered in can a business leave a PEO, and reading it before signing is the correct order.
How should a Las Vegas business compare the cost?
Against the full stack, not the payroll line. Add current vendor invoices, add owner hours at a realistic value, add the recruiting weight of better benefits, then subtract the proposed fee.
Owner hours are the number most often left at zero. An owner spending six hours a month on payroll corrections, onboarding paperwork and benefits questions is spending time that has an actual alternative use, and in a fifteen person business that time is usually the constraint on growth. The warning signs that the back office has outgrown its current setup are catalogued in seven signs a small business needs real HR support.
Nevada detail matters in the comparison too. Nevada prohibits a tip credit, so tips may not be applied toward the minimum wage, and Nevada operates a two tier minimum wage. A hospitality operator evaluating providers should confirm the provider handles Nevada tipped payroll correctly rather than applying logic imported from a tip credit state. Nevada also has no state income tax, which simplifies withholding and removes one common source of payroll error.
On the benefits side, verify the licensed producer involved. Any Nevadan can check a producer through the Nevada Division of Insurance before payroll and census data changes hands.
A PEO is not the only shape available. ProtectHealth is an official Paychex partner, which means payroll, HR and benefits can be handled as one conversation rather than three vendor relationships, without every business needing a full co-employment arrangement to get there. The complete comparison across doing it in house, a payroll service and a PEO is worked through in the total cost breakdown.
The product should serve the strategy, not become the strategy. Book a conversation on the employers page and bring the current vendor invoices.
Frequently Asked Questions
What are the two PEO pricing models?
A percentage of total payroll, or a flat administrative fee charged per employee per month. Percentage pricing scales with wages and bonuses, while per-employee pricing stays level as compensation rises.
Why does no published PEO price apply to a specific business?
Pricing depends on headcount, wage levels, industry and workers compensation class codes, state footprint, and which services are included. Two businesses of the same size in different industries can receive very different proposals.
What sits inside a PEO fee?
Typically payroll processing and tax filings, HR support, compliance assistance, workers compensation coverage, and benefits administration, along with access to benefits pricing pooled across the organization's client base. Inclusions vary by contract.
Which costs commonly sit outside the headline fee?
Implementation and setup charges, per-transaction fees, benefits administration markups, off-cycle payroll runs, year-end filings, and renewal pricing behavior. An itemized fee schedule in writing is the baseline request.
How should a business compare a PEO proposal?
Against the total current spend across payroll service, HR support, workers compensation and benefits administration, plus the owner hours those tasks consume. Comparing a PEO fee to a payroll invoice alone compares two different products.
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ProtectHealth brokers are insurance professionals, not tax professionals. Eligibility for any coverage or tax-advantaged structure depends on business structure, income, and household situation.